Need some advice paying down debt

[Anonymous]

Hi folks, looking for advice. Thank you in advance.

I have about $110k across two personal loans
-50k @ 13% monthly payment $910, $47k and 76mo left
-60k @ 12.89% monthly payment $1087, $59k and 82mo left

Credit score 750-760

My current mortgage will allow me get a home equity loan at about 6.5% (verifying) with a maximum amount of $40k. So this would allow me to get a 15yr HEL for a monthly payment of about $350. I could then refinance the remaining ~$68k under better better terms with SoFi or light stream @ 7% (verifying) for 84mo @ ~1000 monthly pmt.

This all would reduce my total monthly outlay for the remaining ~$108k @ $1,350 vs the current $1,997, saving about $647 per month.

The question is, do I have any better options?

Thank you.

[Revelate]

If you can get those two both together, go for it and don't look back; that's a huge financial win.

You might be able to do slightly better on the Home Equity Loan rate, maybe.  You'd have to search around for it but you might be able to find 5.5% or so current market.  

Actually I stand corrected, DCU is offering 4.385% in today's market on a 80% LTV HEL, would have to check but I think they're still underwriting that under a 700 FICO 5 score.  There's probably lenders near that too but I know their HELOC rates are lower than most and I suspect their HEL ones are too so they're a pretty good benchmark.

If you need 90% LTV that's probably somewhat more expensive regardless of lender.

[Anonymous]

I stand corrected. I have $32k available to me (90% LTV) @ 7.34%. And the term is 240mo.

So 32k @ 7.34% for 240mo = $294
Remaining $75k @ 6.50% for 84mo = $1,120
Savings of $583/mo over current $110k at approx 13%.

[Kforce]

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@Anonymous wrote:
@I stand corrected. I have $32k available to me (90% LTV) @ 7.34%. And the term is 240mo.
@Anonymous 32k @ 7.34% for 240mo = $294
In debt 20 years and cost ~21,000 interest

@Remaining $75k @ 6.50% for 84mo = $1,120
7 years and ~18,400 interest
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20-years and (21k+18.4k) = 39,400 interest

Savings of $583/mo over current $110k at approx 13%.

@105,000 @ 13% with 2000/mo payment = ~51,000 interest loss but paid off < 7

@105,000 @ 13% with 2200 payment = ~43,000 interest and paid in 6 years.

 I would pay a few thousand extra in interest and be paid off in 6 or take new loans and pay the same 2000 a month and save some real money. Your plan of lowering monthly payments and extending your time in debt does not save a great deal of money but does keep you in debt a very long time.

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[Anonymous]

Thank you.

I intend to sell the home in about a year. So the $32k loan will not stretch beyond that.

The other reason for all this refi is to free up some funds. I would like to get the total payment down. Sorry if this was not clear in the original post- I realize I said I was most concerned about lowering int.

[Kforce]

If you can get those two new loans, it will lower your monthly payments.

Free up some cash flow.

Good luck !

[Kree]

While it might not be better, depending upon your accepted level of risk there is another potential option if you have high credit card limits.

If you use the HELOC to pay down the 50k loan, you could potentially transfer the remaining balance to a 0% credit card.

This would get your monthly payment down even further, your APR down even further as well. The lack of additional new tradeline/inquiry is beneficial to profile (might be outweighed in short term by higher CC UTI).

DOWNSIDES:

If you do not sell your home for expected price within 12-18 months (standard 0% BT timelines) then you will be stuck with a higher APR.

Depending upon profile specifics it might hurt your credit score, which could have other issues.

Needs to have a high limit CC that offers BTs

edit:  highlighted "accepted level of risk" because this option should be considered riskier than the original proposed method.

[Anonymous]

This is actually a very good option, and I do have a number of BT offers. However, I had no idea that you can transfer non-credit card balances (loans) to a BT offer.

Also, while I do have relatively high limits they are scattered across a number of different cards. I believe I have 4 or so @ 20k limits. So two options here- spread the remaining balance across those, or request limit increases now, taking an incremental hit on my credit score. In fact, I expect taking either route with BTs will result in a sizable hit to my credit score.