Financial Advise

[rjundi]

People love these things so jump on in good, bad or ugly.

First just really small car debt $5k(2.5%) which will get rapidly paid off after daughter finishes kindergarten ($$$) next year.

We are remortgaging our home(65% equity) from 30 years to 15 years which saves us 3 years of payments due to smaller interest rate(2.9%). We overpay our 30 year mortgage currently.

We can roll our home equity line at $25k (major necessary kitchen renovation) into mortgage or otherwise plan on paying in 5 years. It is at prime + 1%(approx 4% currently).

Is it worth rolling the home equity line into 15 year mortgage or just pay off in 5-8 years standalone? If we combined the two we would try to pay the extra upfront to get rid of homeequity line.

 

[Doog]

Do a side by side comparison and the one with the least interest cost is usually best. Interest cost is interest cost. Your US dollar is being devalued by the Fed so the dollars you pay back in the future are actually worth less than the ones you are borrowing today. I would roll them together for the rate reduction.

 

[John_K]

If the remortgage is 2.9% and the equity line is 4% I would roll it over into the remortgage.

John

 

[bepperb]

IF the car payment is 2.5% it doesn't make sense to roll that into the new mortgage, but it sounds like rolling the heloc into it will save you some interest expense. So yes.

 

[Tdbo]

I'd leave the car note alone and roll the HELOC into the refi and take advantage of the interest differential.

 

[daves87rs]

Originally Posted By: Tdbo
I'd leave the car note alone and roll the HELOC into the refi and take advantage of the interest differential.


+1

 

[Falken]

I would find the best mortgage possible that would free up as much cash as possible regardless of terms.

The reason I do this, is each year I can make a conscious decision if I want to dump a lump sum against the mortgage if I have the money sitting stagnant in a bank account.

In Canada at least, they usually allow 10-15% of the original mortgage amount to be paid yearly without penalty.

So, if at the end of the year you have 30 grand in a bank acount, just dump it into the mortgage balance before the deadline that year and enjoy an immediately lower mortgage or the give the option to just reduce the amount of years owing accordingly by keeping the monthly payments exactly the same.

That way, if you are hard up for cash in lean times you have low monthly payments but over xx more years.

Also, try and just buy used cars and learn to fix them up.

I have bought too many brand new cars, and after the CR-V, I never plan to buy new again. A total waste of money if you can do basic stuff to keep the car going.

 

[NMBurb02]

Originally Posted By: daves87rs
Originally Posted By: Tdbo
I'd leave the car note alone and roll the HELOC into the refi and take advantage of the interest differential.


+1

+2, to get rid of the variable rate on the heloc (regardless of the current rate differential) more than anything. Where do you think the prime rate is going over the next 5-8 years? I doubt it's going any lower...

 

[rjundi]

The car loan in reality was a very low rate education loan for our kids. They are attending public school after next year and my wife's salary will double since she only works 20hrs/week.

We did buy a used vehicle with the loan and do not own any new cars. Our hope is our fleet 2005(150k miles) and 2007($5k loan/100k miles) both serve us for at least another 5 years.

Good point on no rush on car loan. Its a very low interest loan compared to the HELOC where we need to bite down quicker.

 

[jimbrewer]

Originally Posted By: rjundi
People love these things so jump on in good, bad or ugly.

First just really small car debt $5k(2.5%) which will get rapidly paid off after daughter finishes kindergarten ($$$) next year.

We are remortgaging our home(65% equity) from 30 years to 15 years which saves us 3 years of payments due to smaller interest rate(2.9%). We overpay our 30 year mortgage currently.

We can roll our home equity line at $25k (major necessary kitchen renovation) into mortgage or otherwise plan on paying in 5 years. It is at prime + 1%(approx 4% currently).

Is it worth rolling the home equity line into 15 year mortgage or just pay off in 5-8 years standalone? If we combined the two we would try to pay the extra upfront to get rid of homeequity line.



That's easy. Roll it into the mortgage. Its a capital improvement to the house. Therefore its appropriate to include it in the mortgage. In fact, given the economic climate I would think about putting any other capital improvement you might consider into the new mortgage. For example, they subsidize solar so heavily these days that if you happen to refinancing anyway, its a good deal. Check out solar hot water heating too. less publicized but many times a more practical application.

Don't go nuts--it doesn't sound like this is your definitive house given your age--but any landscaping, or plumbing refit or HVAC renovation that you might do in the next five years should be done now.

 

[stockrex]

yes, if home equity line is % rate is lower now or if the interest rate is flexible, just roll in in.

 

[JHZR2]

Which gets you the minimum interest? Which gets you the minimum out of pocket? Youre on the right track going to 15 years, the interest savings there should be pretty good... So you next need to look at which takes the least from you in terms of interest cost, and allows you max cash flow to pay faster.