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Home Refinancing Loan to Pay Off Credit Card Debt – In Palm Springs California

This client is a retired couple who now live in Palm Springs California and are hoping to be approved for a home refinancing loan to pay off credit card debt that they have accumulated on three credit cards. They would like to borrow $70,000, $30k to refinance the existing mortgage and $40k to pay the credit card balances.

They have learned a hard lesson about credit cards and the amount of interest that is charged by credit card companies. Never the less, we expect that the home refinancing loan they have requested will be approved. They have a steady income which will allow them to carry the mortgage with no problems at all even with a shorter term.

There home will need to be appraised to establish the value of the home to ensure that it really does have a value of $300k. Homes all over California have decreased in value substantially and the bank is taking no chances in this area after this most recent collapse in housing prices. However even if the home is valued less than the $300k, we are confident based on the information provided that the value will be more than enough to support the home refinancing loan they are looking for.

Their credit rating is excellent, so this client should be able to be approved for a loan with very competitive interest rates. They stated that they plan to repay the loan in it’s entirety in approximately 3 years when several investments mature.  Interest rates are expected to rise and we suggest that the client re-evaluate at that time to determine if this approach is still the best course of action. They may be better off continuing with a low interest mortgage and reinvesting their savings.

Based on this, the client may be better off with a home refinancing loan line of credit, which would give him and his wife the flexibility to borrow on it as needed, repay it whenever he has the cash and it comes with a low interest rate as long as it is secured. The only requirement is that he must pay the interest that is due every month and he must never miss a payment. Many clients find the flexibility of a home refinancing loan line of credit to be very handy in the situation this client is in. We have quoted rates and payments at the bottom of this post showing loans that have 5, years, 10 years and 15 year terms. The line of credit would be interest only and is not shown in this post.

Home/Mortgage Loan Amount ::  $70,000

Home Loan Application and Processing Speed (when do you need the funds):: Quickly since we would like to repay the balance on our credit cards and avoid the high interest charges

Do you currently have a mortgage? :: Yes, a small one of only $30,000

Bank Name and Branch :: Wells Fargo, South Palm Canyon Drive

What City/Town, State and County do you live in? :: Palm Springs, California

Zip ::92262

What is your employment field? :: Retired

Employment Position :: Retired

When are you paid? (monthly/weekly/biweekly):: Monthly pension payment

Your credit rating to be – excellent, fair, or bad? :: Excellent

How did you find us? :: A recommendation from a friend

How are you paid? (direct deposit/paper check):: Direct deposit to our Wells Fargo account

Gross Amount Per Paycheck :: $5833

Do you agree to have this information published online, without your PRIVATE information of course? :: As long as there is no personal information posted, we are ok with it being posted online.

Extra information here please (some detail):: We purchased a home in Palm Springs, California several years ago with the idea of making it our retirement home. I was still working at the time, so we rented it out to vacationers during the winter time and we would use it at Christmas time and any other time when it was vacant.  We purchased the home prior to the prices sky rocketing, so we are ok relative to our mortgage. In fact we had paid it down to $30k. The home is apparently worth $300,000 based on what other homes in our neighborhood are selling for.

We are now retired and plan to move to Palm Springs. The furniture was a little tired after being used as a rental unit for the past 10 years and so we went ahead and refurnished the entire home, with new beds, mattresses, flat screen TV’s, couches, appliances etc. Unfortunately for us, we charged this all to our credit cards. We have three and they are all at their upper limit at the moment and we will be charged 19.5% interest on two of them, while the other is a store credit card which has a 28% interest rate. This is highway robbery, but that is the fix we got ourselves into.

Note to Lender :: We want to be approved for a home refinancing loan for $70,000 which will allow us to repay all three credit cards, avoid the high interest charges and also repay the loan quickly. I do not need a long term on the refinanced loan,  since we will be able to repay the principal in about 3 years time when several investments mature.

I am retired as is my wife and we both collect a pension. Our total combined income adds up to about $70,000 so we can live very comfortably. Other than these credit cards, we have no other debt. We sold our home were we lived for all our lives and have no other mortgage or loans at all. We are in excellent financial shape except for these credit card balances that we have!

Category: Home Mortgage Loan APR 7.365% APR 4.99% APR 7.365%
Loan Principal $70,000 $70,000 $70,000
Payment Schedule Monthly Monthly Monthly
Length of Term 5 10 15
Amount to be paid $83,101.10 $87,608.81 $108,878.41
Total interest paid $13,101.10 $17,608.81 $38,878.41
Paid per installment $1,366.05 $720.07 $596.59
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