pay off some debt with a 1.99% convenience check?

[Larry B]

Hi, thank you for your input.

2 years ago, I bought a home with no money down. I took out an $8,000 "Home Plus" loan with the Wisconsin Housing and Economic Development Authority for the down payment- little did I know how much this would cost me. It is a 13 year loan that carries an interest rate of 8%. The first 2 years were interest only, so my balance is still at about $7900. Beginning in May, my payments will go from $56 to $103 so at least my principal will finally go down a bit. The thing is, I am on a pretty tight budget and I'd love to clean this up in less than the 11 years remaining on this loan.

I am also trying to clean up my credit card debt. I have not charged anything on them(4 bank cards and 3 retail) in just over a year, steadily chipping away month after month.

Creditor/Balances/Limit:
Bank of America $6000/$11,900 7.71%
Chase $6000/$10,000 8.99%
Elan $0/$20,000 8.99%
Omaha $2,300/$8,000 3.99%
Home Depot $0/$5,000
Menards $0/$2000
Walmart $0/$2000

There is no doubt in my mind that I am through spending money I don't have, but I am going to keep the cards to maintain my credit score(710) even after they are paid off.

I have been thinking about knocking the $8,000 home down payment loan down a bit with the $2,500 I'll be getting in a month or so from my tax refund(not the stimulus), but when I figured out the amount of interest I am going to end up paying on some of these, I nearly fell over. Now, I am trying to figure out if it would be a good move to take advantage of an offer that I received from Elan Financial, a credit card company I have used for 10 years with no problems at all. They sent me some of those convenience checks-as cc companies often do- but this one was offering me a rate of 1.99% for the life of the balance with a 3% transaction fee.

What balances(home plus loan included), if any, should I clear up with this low interest offer? The way the credit issuers have raised rates with little reason to default levels is my concern. I have a fairly high debt to limit ratio as it is- $15,000 out of $50,000 available- if I use the convenience check to pay off the Home Plus loan, I'll have $23,000 to $50,000 debt to limit. Obviously I could probably ask for limit increases beforehand to offset that.


It's just something that has been going through my mind lately and I'm not sure about the risk of my rates going up. What are your thoughts?

[Hypersion]

Apply for some no fee zero % cards.

Get up-to ~ $450 when you transfer $10K to a 5% savings and keep for 12 months: a list of > 100 credit cards sorted by possible re-investment profit (updated on 11/27/07) - iBankDesign

[Larry B]

thanks Hypersion. I'll need more than a promotional rate to get this paid off though.

[Ima saver]

I would take the checks and pay off Bank of america and Chase.

[jIM_Ohio]

Hi, thank you for your input.

2 years ago, I bought a home with no money down. I took out an $8,000 "Home Plus" loan with the Wisconsin Housing and Economic Development Authority for the down payment- little did I know how much this would cost me. It is a 13 year loan that carries an interest rate of 8%. The first 2 years were interest only, so my balance is still at about $7900. Beginning in May, my payments will go from $56 to $103 so at least my principal will finally go down a bit. The thing is, I am on a pretty tight budget and I'd love to clean this up in less than the 11 years remaining on this loan.

I am also trying to clean up my credit card debt. I have not charged anything on them(4 bank cards and 3 retail) in just over a year, steadily chipping away month after month.

Creditor/Balances/Limit:
Bank of America $6000/$11,900 7.71%
Chase $6000/$10,000 8.99%
Elan $0/$20,000 8.99%
Omaha $2,300/$8,000 3.99%
Home Depot $0/$5,000
Menards $0/$2000
Walmart $0/$2000

There is no doubt in my mind that I am through spending money I don't have, but I am going to keep the cards to maintain my credit score(710) even after they are paid off.

I have been thinking about knocking the $8,000 home down payment loan down a bit with the $2,500 I'll be getting in a month or so from my tax refund(not the stimulus), but when I figured out the amount of interest I am going to end up paying on some of these, I nearly fell over. Now, I am trying to figure out if it would be a good move to take advantage of an offer that I received from Elan Financial, a credit card company I have used for 10 years with no problems at all. They sent me some of those convenience checks-as cc companies often do- but this one was offering me a rate of 1.99% for the life of the balance with a 3% transaction fee.

What balances(home plus loan included), if any, should I clear up with this low interest offer? The way the credit issuers have raised rates with little reason to default levels is my concern. I have a fairly high debt to limit ratio as it is- $15,000 out of $50,000 available- if I use the convenience check to pay off the Home Plus loan, I'll have $23,000 to $50,000 debt to limit. Obviously I could probably ask for limit increases beforehand to offset that.


It's just something that has been going through my mind lately and I'm not sure about the risk of my rates going up. What are your thoughts?

The home plus loan is tax deducatable, the credit cards are not.

I would consolidate all credit cards onto one low interest rate card. Pay that off.

Consider refinancing home (what are terms of all loans on the house)? I would not take home plus loan and move it to a credit card.

[Larry B]

thank you, all the advice is appreciated very much.

Home loan stands at 148,000 owed against a assessment of 184,000

30 fixed apr 6.375% I have never done a refi- should I start with the broker that did my first mortgage and go from there?

how much money am I saving by being able to claim the $644 in interest paid on the home equity loan?

[kilcher]

I'm no expert but if I were you I'd consilidate the CC debt on a lower interest card with rewards and get rid of the others. There's no real need to have more than one CC, especially if you have a history of debt.

Anyway, definitely work on the CC debt first.

[jIM_Ohio]

thank you, all the advice is appreciated very much.

Home loan stands at 148,000 owed against a assessment of 184,000

30 fixed apr 6.375% I have never done a refi- should I start with the broker that did my first mortgage and go from there?

how much money am I saving by being able to claim the $644 in interest paid on the home equity loan?

If you are in 25% tax bracket, you would get 25% back of every dollar paid in interest and property taxes.

The amount you get back varies with tax bracket. If you are in 15% bracket, you would only get 15% of every dollar paid in interest and property taxes back.

[Larry B]

cool, thanks for your help.

[Snoopy2645]

definetley use those checks & pay off your debts & pay those checks down & then transfer I have transfered balances around for years on & rarely have I paid interest on cc's

[Taribor]

Just be sure to read the fine print on your new credit card checks. They sound like an obvious no-brainer until you read the very small print which many times stipulates you will be charged up to 3% of the total balance transfer.

[Larry B]

Just be sure to read the fine print on your new credit card checks. They sound like an obvious no-brainer until you read the very small print which many times stipulates you will be charged up to 3% of the total balance transfer.

yes, I covered that in my original post. Thanks for your input though. I've already transferred the Chase balance. I will make up the fee with the interest I saved in 4-5 months.

[buzz]

You may want to attend to that BOA balance quickly. I hear they have been rate-jacking people with high balances.