Posts Tagged ‘lending money’

What should I do about this loan? Mortgage vs student loans?

Tuesday, August 17th, 2010

My math skills aren’t amazing and I’m not sure how I would figure this out anyway, so maybe someone can help me. This is a real life question. We have about 60 or so thousand dollars in private student loans and then maybe 10 in federal loans. If you’re not familiar with private student loans, skip to the bottom and I’ll explain them. The rate for the student loans is currently about 9%.

We are selling our house and if we sell the house for the amount that we paid (we’ll probably get a little more), we will net about 35,000 after commissions. We’re planning on buying a small fixer upper for 75-100,000 and getting a 10 year mortgage. Mortgage rates look like they’re about 4 or so percent. I was planning on getting the 10 yr mortgage, paying it off in about 4 years and then taking out a home equity loan and paying them off. My dad said that I should either put down less and pay down the student loans even though it doesn’t pay them off or take out equity as I go and pay them down.

My hesitation to do this is that my payment on the student loans won’t go down just because I owe less, but with a HEL, I will be paying more for the time being (mtg + HEL+ student loans at the same time). It’s still doable, but I’d rather not be paying more than I have to.

So my question is this:

if I pay down as I go, will my student loans skip ahead so that I’m paying a higher percentage of my payment to the principle than interest? Or is the percentage of principle vs. interest determined by time rather than how much you owe?

What do you think the best strategy for paying off these loans quickly and for the least amount of money?

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Private student loans: they were offered for a short time while lenders were lending money like crazy and they’re not federal loans, so they don’t have the low interest rates. The interest rates on private student loans are variable, currently at about 9%, but it’s been as high as 11.5%. No one is offering them anymore so you can’t refinance them, lock in a rate, file for bankruptcy, or in any way alter the loan terms. No matter what, the loans will be at that rate and you can’t get rid of them. If our credit scores go down or we don’t pay on time or whatever, the rates can go up to whatever they want. So as you can imagine we are dying to pay these off and get them out of our lives.

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Should I try to hold on to my home or let it go into forclosure?

Saturday, November 14th, 2009

We owe 5,000 on our house and it’s now worth about 0,000. We have an ARM that is going to reset in Jan 09. We definitely can’t afford the ,000 jump in payment. Called the mortgage company (Ocwen) and they said we do not qualify for the government’s freeze on interest rates program because our ARM was for 3 years instead of 2, but they said call back closer to the time the loan is set to reset and they’ll work with me. Somehow I doubt it and I don’t want to pay my ,100 property tax bill on the house if I’m just going to lose it in the end. Plus, I’m thinking about all the money we could save every month if we let it go and just rented a house. We’d save about ,000 a month on rent and ,000 a year on property taxes. Why hold on to a house that costs too much and has no equity? Not to mention it’s an interest only loan, so paying it off will NEVER happen. Please give me your advise. Is foreclosure really so bad? My credit score is already low (610)

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I already have a second mortgage…could you take out another home equity loan?

Friday, August 28th, 2009

actually, i should re-phrase that, i refinanced so that i could get a lower interest rate and split my mortgage into 2 so that we could eliminate the PMI…..

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