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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?

 

Ashley

Texan at heart; Arizonan on paper. Lover of running, cheese, camping, and family (fur-family included!). Blogger, motivated to get out of debt YESTERDAY! Follow along with my journey!

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22 Comments

  • Reply Theresa |

    Have you tried to increase the limit on the credit card? I have a Discover card and they always have balance transfer offers available.

    • Reply debtor |

      Came here to say this exact same thing. It might not be much but it should help. If your lender asks you for how much you want increased – shoot high – like 15 to 20k. If they don’t give you that much they will give you the max they think you deserve….so don’t pick like 9k just to be safe.

      • Reply Ashley |

        Great idea! I never even thought about calling to try to increase my limit but that now seems like such an obvious first step! Thank you!

  • Reply Autumn |

    Citi has a card with a 0% balance transfer for 21 months, might be worth getting a new card to be able to transfer more of a balance for a longer period

  • Reply Kiki |

    I think you did the right thing by NOT putting student loans into your mortgage. It’s much wiser, in my humble opinion, to keep your student loans separate from your mortgage. You could be in a world of trouble if you have trouble making your mortgage. (It’s not pleasant to think about, but people have serious accidents, illnesses, long-term unemployment that impact paying your bills.) It just seems messy. I agree with the above that doing some balance transfers along the way could help. Otherwise, just keep burning up those loans! Halfway!

  • Reply Julene |

    I, too, agree that not putting them into your mortgage was a good thing. Yes the interest rate is lower but then you have so much more at risk if something happens. After all, even if you saved 4% you would only save about $3,000 a year if you carried the full balance for the entire year. At your rate of pay off I think you made the right choice ultimately keeping them separate. You are killing it! Just keep it up a bit longer and you’ll have them gone forever!

  • Reply Maureen |

    In your situation I think it makes sense not to have rolled any student loans into the mortgage. You may have gained a lower interest rate, but student loans (in an emergency) can be put into forbearance or IBR. At your aggressive pay rate what you may save on the interest would be rolled into a longer repayment period that you could not cherry pick and pay off early.

  • Reply Angie |

    You were smart not to roll over your loans. The risk there is huge for not much reward.

    In your position I’d refinance the non-subsidized loans at the 5.7% at least until you don’t meet interest rebates with IBR. Its still a savings. And for my refinance there wasn’t that much paperwork… Copy of driver’s license, two paychecks, and a screenshot of my investment accounts. Then it was done! You probably already have most of the paperwork prepared for the mortgage. There really is no reason why you wouldn’t refinance. Plus that would make a clean break between subsidized and non-subsidized so even if you are stuck with Navient longer to wait out the IBR benefits, all your loans will be classified the same so there is less confusion.

    You can then continue to do the continuous balance transfers if you want, but its not really saving you very much money.

    • Reply Angie |

      Also, what type of rates were you really expecting? 5.3% for a fixed rate (if its variable I would probably not take it) is pretty damn good. You can’t compare the rate of a mortgage to student loans. One is backed by an asset the bank can get back if you aren’t paying. Student loans are not. As a result, interest rates are higher on loans than mortgages. This is also why you

      The really low rates you hear of 2.5%-4.0% are usually variable. And likely won’t stay that low past a 3-year timeline.

    • Reply Ashley |

      I think my situation is complicated since I work two jobs. The consolidation company reached out and sent me a form to be filled out by the business manager at my employer (which means x2; one for each employer). I’m happy to show tax statements, paycheck stubs, etc., but I’m not really thrilled to have to go to my employers and ask them to fill out paperwork for a student loan consolidation. That’s another reason I’ve kind of backed away from this plan. In terms of your other question – I have no idea what rates I had expected. But I thought my current rate was very high (which maybe it’s not after all) and thought I’d be able to save at least a couple full percentage points on interest (which clearly I’m not).

      • Reply Angie |

        I agree that’s crazy. I wouldn’t be having my employer go through extra paperwork to do any consolidation. Only if it was only through HR for a confirmation of working there. I’m pretty surprised that they are going to that much detail to be honest. Best of luck!

  • Reply Walnut |

    Well rats. I was really hoping you’d be able to re-fi yourself away from Navient. The stress of dealing with them might be worth a point or two of interest.

  • Reply first step |

    Do you have enough equity in your house to get an equity line of credit? That would probably be the next lowest interest rate, and the interest may be deductible, depending on how much your overall interest and property taxes are. Be sure that you have enough life insurance and disability insurance coverage to pay off or make the payments for the balance of the loans.

    To the people worried about mortgage debt, it can be restructured or discharged in bankruptcy. In foreclosure, the debt goes away, and lenders rarely go after borrowers for a deficit balance on a home loan. Yes, your credit score will be low for a number of years, but the debt is gone.

    Student loans are around until they are paid off or the death of the borrower, and they can continue after death if there is a co-signer. In addition, when a student loan goes into deferment or forebearance, interest may continue to accrue (depending on the type of loan), which will increase the loan amount. If you choose to refinance to other student loans, apply only in your name and pay them off as quickly as possible.

  • Reply Marzey doats |

    The balance transfer only saves you about twenty dollars a month (versus a 6.5% apr) because you need to pay the full amount of interest up front, even though you pay the loan down monthly. I don’t know if its worth it to you to have an extra bill for 20/month.

    Personally, I would just hit the unsubsidized loans as hard as possible, and refinance away from Navient next August.

  • Reply DIY$ |

    You’re probably better off keeping your student loans separate from your mortgage. By doing so you mask the problem and don’t make the behavior changes needed to be aggressive in debt reduction and wealth building.

    I question the benefit of the balance transfer strategy. You pay $225 to transfer $7,500 and avoid paying $450 in interest (at 6%)…hard to too excited about $225 a year in savings, it’s less than $20 a month. Plus since you’re front loading the interest in the balance transfer it’s technically not even the full amount of savings. As you pay off the higher interest rate loans this option will become less and less attractive.

  • Reply C@thesingledollar |

    I dunno, I think I’d take the 5.37% refinance at least for the unsubsidized loans. You save a bit of $$ on the interest, but more to the point, that’s a whole slew of loans you can quit dealing with Navient on. It may not save you that much on interest, but it has the benefit of hugely simplifying your life. It’ll lower your stress levels. And you can always re-refinance later if you find a better rate.

  • Reply C@thesingledollar |

    Also — the next time you have a chance, it might be worth breaking out the Navient loans again in a new chart that shows where you’re at with them now. If you’re close to paying off a number of the individual loans I guess that could change the simplicity calculation.

    • Reply Ashley |

      I was thinking that, too. It’s frustrating since my student loans have been shuffled around to different companies but at this point (with them being one of my only debts, along with that medical bill), it’s probably helpful to see it broken up.

  • Reply Juhli |

    You have done such a great job of knocking off your other debts. How about doing a financial analysis of the order in which to pay off your student loans and just work it with the same determination. Once you start knocking off different loans you may find you can consolidate or that you don’t want to anymore.

  • Reply Sarah |

    I agree you were smart to not roll your loans into your mortgage. You have been gazelle intense so just keep it up. Don’t think about how far you have left to go. Think about how far you have come and you now have a house where you are building equity! Keep it up!

  • Reply Gloria |

    The Citi card that Autumn is talking about is the Citi Simplicity card. I’ve used it to pay down debt and it is 21 months with no interest. Also, they increased my credit limit by 50% without me asking at the 6-month mark! I just logged on and there it was. The great thing about Citi is that you can ask for an increase online at the 6-month mark and not get the dreaded ding to you credit score. Definitely an option I would look into if you are going to be doing the balance transfers.

  • Reply dh |

    Any updates Ashley?

    When you have time it would be good to do a breakdown of the remaining loans. 🙂

    I’m with the majority, no regrets on not rolling those SLs in with your mortgage! It felt “yucky” because it is!

    But once the dust settles, I think it would be worth refinancing just to get rid of Navient. I’d look into either a personal loan or a HELOC, and in a worst-case scenario, take the consolidation loan you were offered. Or maybe wait a couple of months till that “falls off” the last report, and try again?

    Last thing … I know you share so much and this is none of our business, but I’m really curious about the mortgage you ended up with. If you are willing to share, I’d love to know the amount / interest rate / term / monthly payment. If not that’s fine too. 🙂

So, what do you think ?