Hi, thank you for your input.

2 years ago, I bought a home with no money down. I took out an $8,000 "Home Plus" loan with the Wisconsin Housing and Economic Development Authority for the down payment- little did I know how much this would cost me. It is a 13 year loan that carries an interest rate of 8%. The first 2 years were interest only, so my balance is still at about $7900. Beginning in May, my payments will go from $56 to $103 so at least my principal will finally go down a bit. The thing is, I am on a pretty tight budget and I'd love to clean this up in less than the 11 years remaining on this loan.

I am also trying to clean up my credit card debt. I have not charged anything on them(4 bank cards and 3 retail) in just over a year, steadily chipping away month after month.

Creditor/Balances/Limit:
Bank of America $6000/$11,900 7.71%
Chase $6000/$10,000 8.99%
Elan $0/$20,000 8.99%
Omaha $2,300/$8,000 3.99%
Home Depot $0/$5,000
Menards $0/$2000
Walmart $0/$2000

There is no doubt in my mind that I am through spending money I don't have, but I am going to keep the cards to maintain my credit score(710) even after they are paid off.

I have been thinking about knocking the $8,000 home down payment loan down a bit with the $2,500 I'll be getting in a month or so from my tax refund(not the stimulus), but when I figured out the amount of interest I am going to end up paying on some of these, I nearly fell over. Now, I am trying to figure out if it would be a good move to take advantage of an offer that I received from Elan Financial, a credit card company I have used for 10 years with no problems at all. They sent me some of those convenience checks-as cc companies often do- but this one was offering me a rate of 1.99% for the life of the balance with a 3% transaction fee.

What balances(home plus loan included), if any, should I clear up with this low interest offer? The way the credit issuers have raised rates with little reason to default levels is my concern. I have a fairly high debt to limit ratio as it is- $15,000 out of $50,000 available- if I use the convenience check to pay off the Home Plus loan, I'll have $23,000 to $50,000 debt to limit. Obviously I could probably ask for limit increases beforehand to offset that.


It's just something that has been going through my mind lately and I'm not sure about the risk of my rates going up. What are your thoughts?

My father did this recently, and got into a lot of trouble because he made one late payment and the rate went from 0-20%. It sounds like you are on top of paying your bills, and that's the key for these offers. What usually happens is that if you are late on one payment they will raise the interest on the check from 1.99% to closer to 20% - really scour the fine print.

Of course, it's best to get the high interest debt out of the way first, but if there is money left to pay down the house you could do that too.

My advice - read every last inch of the contract/agreement and make sure that you understand and agree with each and every word.

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Money - in ENGLISH!

thanks for the advice!

Anytime you can reduce the amount of interest you have to pay on debt is a good thing.

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Metro Detroit Real Estate

You should definately pay off all of your debts with the 1.99% fixed for life. Even though 3%(balance xfer fee) of 23000 is $690 dollars. Its like this:

You are currently paying almost $1100 in interest each year in just your credit card payments. Thats not even including your loan(the Wisconsin Housing and Economic Development Authority seem to really be out to hurt consumers with this one!)
Where as $23000 @1.99% is only $457/year!
Thats an unbelievable savings! As long as you don't intend to borrow any more money I would suggest keeping your credit card limits right where they are at. There is nothing wrong with a debt to limit of less than 50%.

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Scott McKay
Private Banker
IncomeandCredit.net

Agree with cbass. Be very careful and read all of the fine print. Take the $2,500 and pay off the Omaha before you transfer this balance to 1.99% This will save you the $70 charge to transfer this balance. then start hacking away at this debt.