“Dear Steve,

I need to refinance my home in Oct of 2009. My credit score is 669. I have a mortgage of $130,000, home equity loan of $34,000, a car loan of $4,000, & credit cards of $4,000. Some credit cards don’t have balances.

Do I close these credit cards and extend my home equity loan to pay for my credit card debt and then refinance my home with the mortgage and home equity loan all in one?

Jax”

The Answer

Dear Jax,

Your approach seems to make logical sense. Of course it depends on what the mortgage market looks like in October of 2009. If the lenders are still all constipated or the first mortgage plus the home equity loan equals a substantial amount of your homes value at that time you may find it difficult to refi. It is a risk only you can determine if you are comfortable with.

Also, don’t close the credit cards or you’ll kill the boost those credit cards give your credit report. You can see more about this if you read this other question for details.