[USER]

Hello! Question: My husband and are in our mid-30s, we have a house valued at $450k and a loan of $350k and a car payment $700 monthly-owe $40k.

House is on a 5 yr flex interest rate and is sitting at 3.99%, rate can only fluctuate ~1% when it does change.

The car is at 7.24%. Home refi rates are about 6.5% fixed.

My question is would it be more lucrative to do a cash out refi on our house to pay off the car thus reducing our overall monthly expenses by $500 or leaving it as is?

[Valerie]

Why would you add your car to your mortgage, essentially paying for that car for 30 yrs. That’s never a good idea.

A cash out refinance is going to increase your interest rate and payment on the mortgage so it’s unlikely you would actually reduce your expenses by much overall either.

[Allison]

Trade one debt for another and up the risk on your shelter? No. I’d sell the car.

[Christina]

I’d sell the car and buy something that you don’t need a loan for.

[Rob]

You didn’t say what your income is, but no, I would not use the house like a piggy bank to pay off the car. In fact, I would never have a car payment.

If you can aggressively make extra payments to have the car paid off next year, go that route.

If not, you can’t afford the car. Sell it and buy something cheaper for cash.

[Jeremy]

2.5% on 350 is almost $9k. You would pay an extra $9000 on your house per year (principle isn’t going to go down much at all for several years) just to add your car to the loan (making the mortgage 390 now).

You’ll pay a stupid tax of several cars worth over the next decade if you do that.

Go get a job and pay the car off and never pay interest on something that depreciates again.

[Author]

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