Refi, Invest...or what?


I just bought my first house in June of 2005. I’ve been doing all sorts of research on investing and I really want to get started.
Here are my issues:

-I’m in the middle of a remodel of my kitchen (which is taking up all of the money I had saved).
-I have quite a bit of credit card debt.
-I’ve been thinking about refinancing my house to combine my 1st (6.5%) and 2nd (10%) to get a lower payment.
-I’m guessing I need to take out a line of credit on my house for a down payment so that I can start investing (I know I shouldn’t really start with 100% financing, and that’s how I bought my first house).
-As my first investment, I’m hoping to purchase a duplex in Austin (I’m currently in Vegas)

My question is: How do I start this whole process, where do I begin??

By the way, I’m a 28 year old single girl and I know this is quite a lot of issues…I appreciate any input on my situation.


Hi how are you? I just sent you a PM.

If you have built up equity in the property from the improvements/appreciation in the market since the purchase I would suggest consolidating credit card debt before investing, especially if your looking at 100% financing.

Patrick is right. Clear up as much as you can of your personal debt. This will help you tremendously.

I hate consolidating credit card debt. Then you are paying for 30 years on something that wore out long ago. It’s a bad idea to be paying for something after it’s useful life has expired. By rolling CC debt into your mortgage you create a situation where it’s far easier to lose your house if you have a financial crisis. If you leave it as CC debt, they can’ t touch your house will will likely work with you if needed.

The real key is to get your spending habits under control and focus on paying off the CC. Unless it’s for investing, people get CC debt and 2nd mortgages because they are spending more than they make. Fixing that is step 1 to getting your financial things in order.

10% sounds very high on your 2nd. It seems that your DTI ratio is already going against you. I have a friend that’s levered out his butt and is only paying 8.25% on his 2nd. If you can refi both mortgages into one that’s cheaper then that makes sense. Pay the money you save each month on the CC debt.

“10% sounds very high on your 2nd” that used to be high…but, if your at 100% CLTV that is par for the course.

10% is not high for a 100% purchase. Maybe for a stand alone at 80-90 but not 100%

I agree completely with Marcus335,
It’s a terrible mistake to roll cc debt into a refi, it only has the net effect of converting unsecured debt into secured debt, at the risk of your most important asset. Probably not the advice you’re getting from your broker, but them’s the facts, ma’am.


Your argument makes total sense. However, by rolling that debt into the house are you not acquiring a much lower interest rate than what she would have on the credit card as well as the interest being tax deductible? As for the 30 year payment schedule… She states that she is a 28 year old single female, is she really going to be in the house 30 years??? Is anyone ever in a house for 30 years anymore?
My opinion would be to get the cards paid off from a second mortgage then put as much towards the second mortgage as she can, until it is either paid off or sold. You know what they say about opinions though…

On average people stay in their homes 5-7 years.

If someone has 10K in credit card debt at an interest rate of 12.50% and pays 200/mo towards that debt it’s going to be with them for the next 71 months (5.8 years).

Say you consolidate (30/15 balloon 8.0%…$73.00 month) and you apply the monthly savings ($127) towards the principal balance i.e., still paying 200/mo, but you will be paid off in 61 months. Not only do you save $2,000 dollars but you get to deduct the interest payments.

Debt consolidation works if you play your cards right.

Are you guys nuts? No offense

Minimum payments on CC have doubled. It is by the far the best option. If you make the minimum payment on CC you will pay for it just as long as a 30 year mortgage.

You can’t write off the interest on CC’s but you can on your mortgage. One of “Uncle Sams” perks.

Rolling a car loan into a mortgage is not reccomended.

You guys can’t really be against consolidating debt. This might be the worst help I have ever seen from this forum.

Intended for Marcus & Mark. I need to hit the bed.

Patrik, I totally agree with you. I didn’t post against consolidating debt. I was just confirming the standard rates for a second.

As far as consolidation. If you pay your minimum payment (at least before they doubled their minimum payments) you would be paying on maxed out credit cards for over 30 years at a 20% or higher rate. Not to mention the damage the high limits do to your FICO score. Consolidating your debt into your mortgage is probably the smartest thing to do if you are overwhelmed with your monthly payments. If you are planning to refinance your house to consolidate the first and second, then throw in that credit card debt as well. Put your equity to use.

I apologize Mark , I mean to say David A. Hurlbrink. It was a little to late last night. Sorry.

I think you’re just treating the symptom and not the root cause with consolidating CC debt into your mortgage or HELOC. Trust me, I don’t advocate spending the minimum on the CC balance. That thing needs to be paid off as quickly as possible. However, I think a disciplined approach to spending is the way to do it. Most of us could squeeze out extra money every month of we absolustely had to do it.

I think the real issue is the spending habits that led to the CC debt in the 1st place. I’ve known too many people that whiped out their CC debt by putting it into home equity then racked up the CC debt again within a few months. Then it’s really not a pretty situation.

Also, it’s always good to have some equity in your home. We can debate all day whether the housing market is going to keep going up, plateau, crash, slow down, etc. That just goes to show that there’s a lot of uncertainty. In times like that it’s good to have some equity in your home so you are mobile if you need to be. When you’re levered to nearly 100%, you’re going to be one of the ones that gets screwed if something does happen. People don’t have the job security that they used to have.