I am considering a cash out refinancing of my mortgage for the purpose of consolidating my debt to one loan and reducing the total effective interest rate. I would appreciate some feedback, especially if I am doing something stupid.
My current situation is that I have five loans totaling around $77,000. The interest rates vary from 2.25% to 5.48%. Details of my debts from the end of January are in the thread below.viewtopic.php?f=2&t=61922&start=0
The benefits include having only one debt payment per month, a lower effective interest rate, and a lower monthly outlay required to stay current on my debt. The first two benefits are obvious and the third would help me in the event of a job loss as my EF would last longer with a lower minimum payment. My current minimum monthly payments on all my loans is about $1350 per month. I have also been putting an additional $400/month toward my debts. The two mortgage options I am considering are as follows.
15 year @ 3.00%, ~$520/month, ~$1650 closing cost.
10 year @ 2.875%, ~$720/month, ~$750 closing cost. (Reduced closing cost is part of a promotion.)
The downside is that I will extend the time until I am debt free and end up paying more interest as a result. The goal of this reduction in the rate of loan repayment would be to fully fund a Roth IRA, get me EF to a 1 year value, and free up cash to remodel my home. I bought a bank owned fixer upper and should probably fix it up at some point. The kitchen is 1959 original!
To sum it up, I have spent the last 4 years aggressively paying down my debt and have reached a point where the amount I owe does not cause me much concern. I see the low rate on a single debt as allowing me to relax on my debt focus. I want to increase retirement savings and improve the place I live. I believe that I am disciplined enough to not simply waste the money not spent on debt reduction, although I could be wrong.
Please let me know if you think I am making a bad financial move, or if you have any suggestions of other things I should consider.