We are refinancing our house. For several days, pretty much all I did was look
at amortization charts to try to figure out how to get the best deal. Our mortgage
payment will soon drop by $267 a month, which is a lot, so that's good. The whole
research and chart-staring process created something of a bee in my bonnet, and
so we are now trading a variable-rate home equity line of credit, a car payment,
a personal loan, and two credit cards for an enormous home equity loan with a
60-month term at a low, fixed rate. While it's rather frightening to commit to
a payment of that size, the amount of that payment will actually be much lower
than the minimum payments alone on the debts we're replacing, and we'll end up
saving $239 per month just on interest. Plus, since it's a fixed-term loan, we
won't have the option of hanging out and making interest-only payments for the
next ten years, which is currently what we're doing with the home equity line
of credit.
I realize personal finance isn't the most exciting topic, which is why I haven't
been updating. However, if I haven't lost you already, and you're actually interested
in things like this, then here are some other things you might be interested
in:
1. bankrate.com is a really great site
for comparing rates on all sorts of loans and savings accounts. That's where
I found our new home equity loan.
2. I love this little program.
3. If you're looking for information on debt reduction, go here.
Many of the steps outlined in the lessons are more common sense than anything
else, but the workbook
that accompanies them is excellent.
4. I've been getting mail for the last couple of years from companies offering
very low rates for student loan consolidation, but it was my understanding that
I couldn't consolidate my student loans until after I was out of school unless
I wanted to start repaying them now. That's wrong—or at least it's wrong if
you're me, or anyone else who has at least one Direct Loan from the US Department
of Education. If you have a Direct Loan, you can get a Direct
Consolidation Loan even if you're still in school, because unlike other
lenders, the Department has a special in-school
consolidation program.
Federal rates on Stafford loans are the lowest they've ever been, and they're
expected to drop even lower on July 1st. While students paid 8.19% on Stafford
loans in the 2000-2001 academic year, students this year are paying 4.06%. The
projected rate for July 1, 2003 to June 30, 2004 is 3.42%. This is a huge deal,
especially if you owe an amount that you're pretty sure exceeds the operating
budget of, say, Rhode Island. For me, the difference between 8.19% and 3.42%
is a savings of over $90,000 in interest over the life of the loan. It's also
the difference between a monthly payment of $628 and a monthly payment of $377.
It's big enough that I was actually considering going into repayment early so
that I could lock in the lower rate. Now that I know that's unnecessary, I'll
wait until the rates drop in July, consolidate, and once again start pretending
I never borrowed all that money.
