[terry1156]

It's difficult to give suggestions without seeing your entire budget -- if you are willing to post that I know that everyone here can not only give you their opinion on whether or not you should go for the refinance, but also probably find a number of places where you can save money (the members here are great at finding those) to put you in even a better financial position.

Since at this point we don't have your entire budget, I think you can get by without taking out the loan. While this is not the "easy" alternative, it will put you in a much stronger financial position when you do decide to sell the house and I think you'll be glad when that time comes that you did. Make a few sacrifices now and be much more financially secure in the future.

I would put off the home improvements for a year unless they are absolutley necessary for the functionality of the house and put away a bit on the side toward those that you want the most. This will get you in the habit of saving for what you want as opposed to getting what you want and worrying about how to pay for it later. I think you'll also find that by doing it this way, you'll appreciate and enjoy the improvements you make to a much greater extent.

I would then put every penny I could save into Emigrant Direct (or some other saving account that is paying more than 3.5%) and pay the minimums on the credit cards while building up a fund where you can pay off the cards right away if the rates go up.

It really doesn't make sense to trade $25,000 in unsecured debt where you're paying less than 3% for secured debt your paying 5.5% for. If you were paying 24% interest on the cards, I might be able to see an argument there, but not in this case.

With rates as good as you are getting on the cards, obviously you have kept up on the payments and your credit scores are good. That is an enviable position to be in when trying to reduce debt. A big congratulations there.

If you can do the debt reduction without the refinance, it will mean when you decide to move, you'll have an extra $100,000 or more in equity - when you look at it that way, cutting back a bit for 2 years makes a lot more sense.