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Cashout refinance & HELOAN payments are the same. Need advice.

Cashout/HELOAN amount - $80k

Amount of equity in home: $150k

Purchased home 10 years ago.

I know people always ask for details, so let me say this:

During the pandemic we had family members who were struggling financially. We kept helping and helping and wound up realizing we were swiping more and more for ourselves with a CC to keep these family members afloat.

I don’t want a speech on how we should or shouldn’t have done this. What I’m here for now is to say we’re in debt by a lot. And due to the high interest rate CCs we have, we want to pay this off. We are paying thousands upon thousands of dollars each year and it’s not touching the principal.

My question is this:

We asked around to lenders about a cashout refinance, HELOC and HELOAN.

HELOC we’re not comfortable with, Especially due to the variable rate. Given what we’ve seen with the state of rates and such jumping and going back down month to month the past few years? I don’t want to chance it.

HELOAN payment for 20 years is $903 a month at a rate of 7.75%

Cashout refinance payment is $713 extra a month (on top of our mortgage) for 30 years but we’re only planning to stay here maybe another 5-10 years. Rate is 5.58%.

I am trying to figure out why the cashout refinance is so frowned upon in these situations. I know everyone will ask what our current rate is but we don’t plan to sty here longer than 5-10 years so I’m not sure why that would matter.

Take the current rate we have out of it - why is going with the cashout refinance so frowned upon by people? Please educate me!

submitted by /u/thethirteenthjuror
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source https://www.reddit.com/r/RealEstate/comments/1owtos0/cashout_refinance_heloan_payments_are_the_same/
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