Should We Consolidate Our Mortgage and HELOC With American Bank Mortgage Company? – Lisa

“Dear Steve,

I have a first mortgage with Chase bank it is -$84,000. I also have a heloc with Chase bank it is $114,000. The heloc is interest only. The interest rate on my first mortgage is 4.5% fixed for 12 years. The heloc interest rate is 2.4%. I pay a total of $924 per month on these two loans. In 3 years the heloc will switch to a fixed rate with a much higher interest rate. I am in the process of trying to combine both loans to a 30 year fixed rate with an interest rate around 3.2 – 3.7%. I’m working with American Bank mortgage co. I am 53 years old, my husband is 51 and a veteran. We chose a VA loan route.

Do you think this is a wise thing to do? Do you know anything about American Bank?


In God We Trust

Dear Lisa,

I prefer 30 year fixed rate mortgage over either adjustable rate or 15 year mortgages. If you get a 30 year mortgage and want to pay it off early, just increase your payment and keep it there.

The one fact you did not share is the value of your home. I’m assuming the new mortgage will be less than the value of your home. It must be, otherwise the new mortgage company would not approve you for the loan.

One obligation you have against the property now is problematic. I have a big worry about the HELOC. That is a time bomb waiting to explode.

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There are some advantages towards consolidating these two obligations if you are unable to repay the home equity line of credit and clear off that note.

But the underlying concern needs to be if the HELOC was used to make ends meet and that’s what drove the balance up. If so, then we’ve got bigger issues to deal with.

I could not find any specific information about American Bank Mortgage Company. Maybe you can give me an address, website or their main telephone number and I can track things down that way.

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The VA loan route can be less costly to you to refinance. VA loans have limits on what the loan charges can be. You also would not be required to pay Private Mortgage Insurance (PMI) with the VA loan.

Additionally, going the VA loan route can get you a lower interest rate than if you went with a lender that put more emphasis on credit scores first.

Please post your responses and follow-up messages to me on this in the comments section below.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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