"We bought our home in 2003 and have a mortgage and a home equity. The problem is that the home equity is an adjustable, interest only 10-year loan. I really have no idea what we were thinking, but it’s done. As luck would have it, we’ve been unable to pay off any of the home equity loan. Would it be wise to refinance and combine the mortgage and the home equity? Will this affect us in any way if we sell this year or later?"
If you plan to sell your home within the next few years, it doesn’t pay to refinance because the upfront costs will be more than what you’ll save in your monthly payments. But if you expect to stay in your home longer, combining both loans at today’s low rates makes good sense. But meanwhile, stop beating yourself up over it! At the time you signed on, home prices were going straight to the moon and, like everyone else, you believed the myth that “you can always pay it off!” There are another eight million people who fell for that promise, too.
