Sounds like a VERY bad deal. You are in a bad situation and this deal will only make it worse. Interest rates will go up over the coming several years rather than down. Locking the rate for the first two years will get you very little since after that you'll likely be looking at big jumps in interest.
My advice would be to avoid this loan and do whatevery you can to eliminate the rest of your debt. Sell unneeded luxuries, borrow from family or friends (if possible), cut every expense possible, etc. This loan will put you in a bigger hole than you're already in.
Additionally, there is a decent chance that home values will cool in the coming years and you will be hard pressed to get out from under this should that happen.
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