Yayyy, this is the HAPPY part!
So, “Operation Heloc” was put into place by my fiancee and i to save more money on our interest payments. Being brand spankin’ new about houses, mortgages, etc, we really didn’t know what we were getting into. We trusted our financial guy though (w/ Weichert Financial), and this is what we got:
1st Mortgage: 30 year fixed @ 6.875% – interest only, fixed rate.
2nd Mortgage: HELOC (home equity line of credit) @ 9%*- interest only, variable rate.
At first this didn’t mean anything to us. After a cple months, however, it occured to me that 9% is pretty high considering the both of us have Excellent credit scores. I know it’s a 2nd mortgage, but still. I started reading all the blogs out there and MAN there was a lot of info (Thanks guys!). The one that really caught my attention was a post from The Simple Dollar on Money-Merge accounts. After hours and hours of further research, it occured to me that we could (and did) do the following:
a) Refinance for a lower rate – We did this 3 months later and got it down to Prime – .45%!!! (at the time i believe it was 8.25%) knocking it down a good 1.2%!, and it only cost us $42 :)
b) We then took out most of our savings and checking $, about 9k, and “paid off” part of the Heloc. This was done by basically using the HELOC as a “checking” account. We xferred all our savings in it, deposited all my paychecks, and then wrote checks out of it to pay the bills. Wierd/COOL/neat? Yeppers. This in effect saved us even more in finance $.
So, overall the plan worked PERFECTLY! We saved a total of $72.00 each month just by doing the above. Since then, the rates have also been going down, so we are now set at a little over $200 savings EACH MONTH!
All in all i’m am happy with our decisions, and we have saved a total of $1,492.40 over the course of 6 months. I will, however, lock in a portion (if not all) of it when I feel the rates are at the lowest points.
Bonus tip: Find a good "balance transfer" offer to help pay off debt faster!
If you’ve been making payment after payment (on time) and still haven't been able to get your debt under control, snatching up a good balance transfer credit card offer may be the ticket to try. That’s where in order to gain your business - credit card companies will let you transfer your existing debt to a new card and let you pay ZERO PERCENT interest on it. Saving you tons every month!
What's the catch? Usually balance transfer cards charge a fee (around 3% of your debt balance) to let you transfer your balance to their 0% interest offer. But we've found a great credit card that will let you do a balance transfer absolutely free. Click here to learn more and see if you qualify!
PS: If you don't trust yourself with another credit card, ignore this! This strategy is to help you get out of debt quicker, not risk adding more to it.