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Posts tagged with: loan consolidation

You Told Me So

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When we were going through the process of getting a mortgage, we shopped around with a lot of different lenders and ended up with a company that we were…luke-warm about after it was all said and done.

The experience, itself, wasn’t exactly pleasurable. I know it’s stressful anytime you buy a house, etc. etc., but there were some things I didn’t share that were really frustrating. But the one GREAT thing this lender had that no one else could compete with was a stellar interest rate. We got our loan at a 2.75% APR!!!

At that time, a handful (maybe 2 or 3?) of commenters mentioned the option of perhaps rolling some of our student loan debt into the house. Our loan was for well below the appraisal price of the home, so this could have been an option (note: not for all the student loans, but a portion of it).

Hubs and I talked about it and decided against it. Ultimately, we both just felt a little “yucky” at the thought of rolling student loan debt into the house. It just didn’t sit right with us and we took that as a sign that we should probably do something different. The plan was always to look into student loan consolidation companies after the mortgage went through.

When the mortgage was finally funded in early November, I started shopping around just a couple weeks later.

First I was denied by a place. (update: the “negative mark” was, indeed, my delinquent account I’d mentioned in this post. It’s old enough that it should be off my report – and it has, indeed, fallen off of 2 of the 3 credit agencies, but it’s still sitting on the third. I’ve completed a formal dispute so hopefully this will be rectified soon).

And then I discovered that other places really couldn’t offer better rates at all! Here’s a sampling of rates that I was offered:

6.99%

6.49%

5.37%

My current student loan interest rates range from 5.8 – 6.5, so there’s not even really much of a savings compared to what I currently pay.

And now I just kind of feel foolish. I feel like I should have listened to YOU and put some of that student loan debt in with the house debt. Ugh! I guess hindsight is 20/20, right?

This has stalled plans a bit in regard to the student loan consolidation. I’m just not crazy about a 5.37% APR. Yes, it’s lower than my current interest rate. But is it low enough to go through all the paperwork hassles and the fact that I’d now have one GIANT loan instead of multiple, smaller loans to tackle?

I don’t know.

And, that must be balanced against the fact that I truly despise our current lender, Navient.

Again, I just don’t know.

I’ve been doing these balance transfers on a credit card I don’t use. It has a limit of $7,500 and allows me to do balance transfers at a 0% APR for 12 months at a 3% initiation fee (note: this is the current “deal” as of today. In the past, I’ve been able to score as low as a 2% initiation fee, but for a shorter amount of time – I believe 6 months; That “deal” isn’t showing up anymore so it may have been discontinued).

Anyway – that’s the best rate I can get. But that’s only $7,500 at a time and I still have a MOUNTAIN of debt to contend with (most recent debt update here).

So I’m kind of at a loss. Here’s what I’m thinking in terms of a plan moving forward (though I’d love to hear your thoughts, too, so please chime in!):

  • I’ll keep all the subsidized loans with Navient (I’m receiving forgiveness on unpaid interest through August). I’ll pay minimums on those to reap the interest-forgiveness benefits.
  • I’ll continue doing these balance transfers to reap the benefits of the lower interest (with the note that I’m always EXTRA CAREFUL to ensure they are fully paid off by the deadline so I don’t get hit with penalties and sky-high interest). As each balance transfer is paid in full, I plan to continue to initiate new transfers up to the $7,500 limit as allowed.
  • Finally, I’ll continue paying aggressively toward the remaining (unsubsidized) loans.

This seems like the best course of action for now. Unless someone can offer me a better interest rate on a consolidation, that is.

Thoughts?

 


We <3 our Credit Union!

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I made time today to call Discover in an effort to get that awful 18.24% interest lowered.  There’s about a $7,000 balance on this stupid card but with a good pay history and a long relationship…I thought I might be able to get some interest knocked off.  After making it past their first layer of defense I was sent to a “specialist.” I explained to her that we have implemented an aggressive financial plan as of 1/1/12 and lowering this interest rate will dramatically help in the debt reduction plan.  She reviewed my account, praised me for my on time payments, advised that this card is best used for regular monthly expenses that are paid during the grace period so the cash back benefit can be best utilized.  After the reminder of what I SHOULD have done was over, I let her know that my credit union had made a good offer on a balance transfer option–at 10% I threw out there–but I wanted to end things well with Discover so our future relationship could be protected (or something like that) and she politely said “no.”  I was bluffing because honestly I didn’t think the credit union would extend any credit to us! Allrighty then.  I reworded my request a couple of different ways but nada!  This created an internal reaction for me that I can’t really describe—I wasn’t offended but I guess both frustrated and irritated!  I likely would have been happy with 5% off taking it to 13.24% but to offer nothing simply motivated me!

The next thing you know I am on our credit union’s website completing a “signature loan” application!  I double checked with the hubs of course. I’ve banked with this credit union since 1985 and my Dad since long before that year–the 1950’s I believe.  My husband and I opened our joint account there even before we married as we saved money for our wedding trip with the kids.  He had banked with traditional banks in the past and liked what he saw with the credit union. We have a very good history with them and they have always been very good to us—this doesn’t mean they’ve always given me the credit I’ve asked for (thank goodness!) but always very fair.  We asked for $11,000 to pay off 4 credit cards.  Within 2 hours we received the email letting us know we were approved!!!  While not the 10% I envisioned, we did get 11.4%!!!  It is a 48 month pay off but that makes the minimum payment $280 and we already pay $340 on those cards each month.  Taking that $340 (and yes, we plan to pay more than that) this credit union signature loan would be paid off in 40 months.  If we pay $500 per month (completely doable barring any unforeseen issues), we are looking at 25 months to payoff.  We did some quick calculations–taking just the minimums on these 4 cards…if we had never started paying attention and just kept paying the minimums, we would have paid $26,230.46 in interest!!!!! Barf.  If we go with the $340 “minimum” that would be $2,356.13 and if we do the $500 per month…that amount goes down to $1,485.15!  That’s an approximate $25,000 savings!!!!  And as I type this my husband is saying that we will do $800.00 a month and that means 15 months and only $893.14 in interest.  UNBELIEVABLE!

We’ll finalize this loan this coming week.  I am feeling very, very thankful for the options I DO have.  Please know none of this is lost on me.  I am so grateful that we have options—and so, so grateful that my path led me to this blog and that I was selected to share my story.  🙂  Thank you to everyone who has nudged me via comments.  While I may not be able to respond to all, I read every single one and truly take the advice to heart.  Is there an emoticon for “beaming!”  ??? Thank you!