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No. of Recommendations: 3
August 2013       April 2014       September 2014     December 2014
Amex 15.24           35454             23500                      0              0
Chase 14.24          16580             12000                    800              0
Chase Freedom        7143 (15.24)       4000(15.24)            8493 0%          7996 0% until July 2015 (15.24)
Bank of Am 1         7072 (9.9)         4000 (9.9)             8320 0%          8224 0% until Jan 2016 (9,9)
Bank of Am 2         8700 (11.24)       6000 (11.24)           7002 0%          6795 0$ until 9/2015 (11.24%)
Cap1 Vent 29.9       3395                  0                      0                0
Cap one  9.9         4384                3500                  3284                0
Prosper  19.79       9160                   0                    0                 0
prosper  14.79       9605                   0                    0                 0
Lending club 10.99                       15200                 13285.82            0
Citi                                     2500                  2838              2765 0% till 4/15 (22%)
Chase slate                                                    3047              2957 0% till 7/15  (?)
discover                                                                          8240 0% until 2/15 (12.99)
                    
                    101493                70700                47069             $36977


This is where I stand right now. The only debt that I am currently paying interest on right now are my student 
loan debt (19k - 2.625% interest) and the mortgage (approx 464k at 2.94% interest).

I can continue to pay off the consumer debt, snowballing until its wiped out - roughly September/October. 
Or I can slow down a bit and pay extra off of the student loan or mortgage and pay off the credit cards 
until the very last day that the 0% runs out on each extending my debt payoff by an additional four months. 
I am leaning towards making progress on the student loan or possibly the mortgage. We are in year 3.5 of a 
5 year ARM. I would like to refinance once we get the loan out of jumbo territory to get the best rate. The 
mortgage is roughly 3700 (PIT). We have been paying 5k/month to get to <417k to refinance.

Also, one side question, if the 0% runs until the last day of the billing cycle 7/20/2015, does that mean 
I have to pay the balance off on 7/20/2015 or does it mean that if I do not pay the balance on the next bill 
in August, I will have to pay interest?
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Congratulations

Looks like good progress - my suggestion - Take out the the Citi and Discover Cards, then start making progress on the mortgage. Look for a few balance transfer offers that might allow to consolidate the Chase Slate and Chase Freedom onto a single favorable card.

Note that I consider the ARM a big interest rate risk, so I'd prioritize that after getting the Discover and Citi cards out of the way.
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Great progress!

the mortgage (approx 464k at 2.94% interest)
.
.
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We are in year 3.5 of a 5 year ARM. I would like to refinance once we get the loan out of jumbo territory to get the best rate. The mortgage is roughly 3700 (PIT). We have been paying 5k/month to get to <417k to refinance.


- Is the 3700 actually "PIT" (Principal, Interest and Taxes)? Or something else, like "PI" (Principal and Interest) or "PITI" (Principal, Interest, Taxes and Insurance)? I ask because if you are escrowing for taxes, it's very unusual to not escrow for insurance, too.
- What is the Principal and Interest required payment?
- What are the caps on your ARM? I have typically seen caps of 2% on the first reset and 5% for the life of the loan, so your initial reset would probably max at 4.9%
- If you have been paying $5k/month, you are already snowballing the mortgage with $1300/month, right?

Assuming that the refi will take about 30 days to put in place, at 3.5 years, you have about 1 year 4 months to get your principal balance down by almost $50k in order to not have to refinance at the conventional rate. If you are only paying $1300/month extra, that's probably going to be a challenge.

Unfortunately, it doesn't look like you would have very much extra to throw at the mortgage if you delay paying off the credit cards, assuming that you want to pay the cards off before the rate increases. You said that you can have the total $37k paid off in Sep or Oct (2015?). However, in order to not pay interest on any credit cards, you would have to have all of the cards except for BofA #1 paid off by Sep, 2015 anyway. BofA #1 will have an $8.2k balance in Jan, 2015, and you will have to make 8 more minimum payments, of probably $80 or so, so by Sep, 2015, BofA #1 will have a balance of about $7.6k, which you would have to pay off in another 3 payments in order to not end up paying interest on BofA #1. So, you might be able to throw an extra $10k at the mortgage 4 months early - At a 2.94% interest rate, paying $10 4 months early will reduce your principal by about $100 more than if you were to pay all of the credit cards by Sep/Oct.

Additionally, I have been seeing a lot of talk about the Fed increasing rates by the middle of next year, especially with the strong jobs report that came out last week, and rates already seem pretty much stuck at/above 4% http://www.bankrate.com/funnel/graph/default.aspx?cat=2&... Because of that, I would say that you are looking a refi target date that's sooner than the 16 months or so that you could take.

My suggestion would actually be to look at refinancing within the next 3 - 4 months, or you have a good chance of ending up paying a higher rate than the 0.25% extra that you might pay because you will have to take a jumbo loan. If it's that important to you to not have a jumbo rate, then consider taking money out of your savings to get down to the $417k loan amount.

AJ
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Also, one side question, if the 0% runs until the last day of the billing cycle 7/20/2015, does that mean I have to pay the balance off on 7/20/2015 or does it mean that if I do not pay the balance on the next bill in August, I will have to pay interest?

It's usually best to ask your credit card company this question because the terms of each BT offer can vary. However, in general, I would say that if the promo rate ends on 7/20/15, you will start being charged interest on the balance as of 7/21/15, so you had better have a $0 balance before 7/21/15 if you don't want to pay interest.

AJ
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The discover card is actually 0% until 2/2016 so only 60% of the debt would lose their 0% interest by September 2015. I made a typo in the original post. Does that change any of your recommendations?
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The discover card is actually 0% until 2/2016 so only 60% of the debt would lose their 0% interest by September 2015. I made a typo in the original post. Does that change any of your recommendations?

No. It's about another $7.5k that could be paid after Sep/Oct, but still would end up being paid by Feb, 2016 - before your mortgage will reset. That will decrease the principal on your mortgage by maybe another $100.

I still believe that, if your goal is to get into a 30 year fixed rate mortgage, the bigger concern for the mortgage is if you wait until just before your rate resets to refinance, it's very likely that interest rates will have gone up, probably by more than the 0.25% or so that you will save by getting a conventional rate mortgage instead of a jumbo rate mortgage. In fact, considering that rates have been pretty solidly above 4% all year (with a slight dip down to 3.9% in Oct & Nov) it could be that the rate you will be offered on a conventional 30 year fixed in 15 - 18 months may actually be 5% or more. If you allow your current loan to reset, and it has a cap of 2% for the first increase, it would only reset to 4.94% - which is less than the 30 year mortgage rate you might be able to get. So, you need to decide what's more important to you - a lower interest rate, or having a fixed rate.

You might also look into refinancing into the PenFed 5/5 mortgage product. It will reset every 5 years, instead of holding for an initial 5 years and then resetting every year, like your current mortgage probably does. The max increase on each reset is 2%, with a lifetime cap of a 5% increase, so it couldn't even get to the max possible rate until the 3rd reset in year 20. Their rates for this mortgage are the same for both conventional and jumbo, and currently are 2.75% - which is less than your current rate. https://www.penfed.org/mortgage-rates-all/#Tab1

Disclosure - I currently have a 30 year fixed rate with PenFed at 3.25% Even with that low rate, if I weren't looking to keep this mortgage for more than 10 years, I would probably be trading it in for the 5/5 mortgage.

AJ
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- Is the 3700 actually "PIT" (Principal, Interest and Taxes)? Or something else, like "PI" (Principal and Interest) or "PITI" (Principal, Interest, Taxes and Insurance)? I ask because if you are escrowing for taxes, it's very unusual to not escrow for insurance, too.
- What is the Principal and Interest required payment?
- What are the caps on your ARM? I have typically seen caps of 2% on the first reset and 5% for the life of the loan, so your initial reset would probably max at 4.9%
- If you have been paying $5k/month, you are already snowballing the mortgage with $1300/month, right?


It is actually only PIT, we pay the homeowner's insurance on our own.
Roughly $1300 goes to principal, $1100 to tax, and the remainder to escrow the taxes. The rate resets every 6 months by 2% and for a total of 6% for the life of the loan. I looked into the penfed loan and it seems awesome. My credit score acc to Discover is 707. If I wait 3 months, I could get rid of 9k in debt which would improve my ratio and make me 36 months out from my one and only late payment. I have no idea if it would result in a significant enough bump in my credit score to make an impact, but I think worth a try. My husband's score is 760 but my understanding was that it is the lower credit score that leads. Hopefully the rate will remain as it is now.

So then I will just continue doing as I have been doing. Pay off the cards, refinance the mortgage, and tackle the student loan debt in Sept or Oct 2015. The end seems sooooo far away, but then again I can't believe 2014 is almost over, the year always go by so fast.
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neveragain,

You wrote, My credit score acc to Discover is 707. ... My husband's score is 760 but my understanding was that it is the lower credit score that leads.

FWIW, this is the reason I never put my ex-(wife at the time) on my refinances. Having her on the loan would have either raised the rate or disqualify us for the loan.

The lenders were willing to do this as long as she was willing to sign a waiver at closing. Fortunately my income was sufficient on its own and she never had a problem signing the waiver.

- Joel
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My credit score acc to Discover is 707. If I wait 3 months, I could get rid of 9k in debt which would improve my ratio and make me 36 months out from my one and only late payment. I have no idea if it would result in a significant enough bump in my credit score to make an impact, but I think worth a try.

First, I would suggest giving PenFed a call to see if your credit score will disqualify you from getting the current 2.75% offer, since it's lower than you current rate. Each lender has their own criteria, and I've heard of requirements as low as 700 to get advertised rates.

If it would raise the rate you would be given, what are the reasons given for your score being what it is? If the first 2 reasons are something like "Too much borrowed on credit cards" and "Recent late payment" - then you will probably see an increase - although it's not clear how much the increase will be.

My husband's score is 760 but my understanding was that it is the lower credit score that leads. Hopefully the rate will remain as it is now.

Another option, as Joel already suggested, would be for your husband to get the loan based only on his credit and his income, if he will qualify. If you want to be on the loan, be aware that it is possible to add someone to a loan at a later time, so once your credit score gets better, you can ask PenFed to add you to the loan.

AJ
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