Just pay extra on the credit cards

At this point and time, my husband and I have decided to just pay extra on the credit cards and maybe do an equity loan further down the road. That way we could use all the money for the basement and not have 1/2 go to credit card debt. We also will set up a savings pland and get a few things along the way. Maybe we’ll start finishing the basement one project/room at a time.

That’s not true that no one ever pays back the principle. I know that “could” happen, but that doesn’t mean it would in every situation. What do you mean “they are not building anything”? This of course is just my opinion, so TIFWIW. I think an interest only loan can provide you some valuable financial relief. The important thing to reflect upon is what you would do with that relief.

You said you intend to make extra payments towards the principle. If you have the discipline to stick to this, the lower interest of an IO is a benefit you might want to take advantage of… If that relief makes you feel like going shopping then that interest only loan is only putting off till tomorrow a debt you’re better off taking care of today.

If you do go with the interest only loan a good budget is going to be important. I do agree that it could certainly be a disaster! I definitely would never get an interest only mortgage.

Why not refinance everything into one loan?

interest only loan doesn’t build on principal, only pays the bank their interest. It’s a rip off situation… There are calculators to see if you should refinance. Try bankrate.com or do a search for something like: refinance calculator.

On second mortgages etc… Because it wouldn’t just be you ‘planned’ to, but your very house would be in danger of loss in you didn’t. That is a big risk, and you had better be 100% certain you are that disciplined. If you have had trouble before, you probably aren’t.

Interest only, what is the benefit exactly? Again, have you been that disciplined before? If not, you’re kidding yourself that you would now. Just like I’m going to buy this pair of pants even though they are too small right now because I really will lose 10 lbs within 2 month… sure, right… lol Has your (and your spouses) history proven you are that disciplined and be extremely honest with yourself? If you’re that confident, why not just get a 10 or 15 year mortgage with required higher payments?

Somethings to consider are:

Do you really need to do these improvements? If the bank is essentially saying you can’t afford them, maybe you should wait? Is this a want that will cost you more than you can afford, or a need you will just have to live with? Also, without spending more, maybe then you could qualify for a different loan or could in 6 months etc…?

Strongly telling myself, I need to have this conversation with myself much more often. : )