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We currently have three auto loans and three credit card, making six payments going out each month. The average APR on all come to 11%. Some of the autos were used so the APR was not so great and the CC are from ages ago when our FICO wasn’t that great either.

Our FICO is in the high 700’s so getting approved for a HELOC or an unsecured personal loan wasn’t a problem.

The reason we don’t want the HELOC is that the houseing market isn’t that hot right now and we don’t want to max out our home loan.

So the other day we were approved for the full amount that we asked for but will end up using 92% of the amount we asked for.

The main reason is that I would like one payment for everything. That way I’m not shuffeling things around just to make the min. payment on things etc. And when the housing market pics up we could revisit the HELOC.

What do you think?
As far as the HELOC, we didn’t have enough in the house to take care of all the loans so it wasn’t going to work right now.
that’s good to know that you’ve done it before. I like the idea of the single payment. We just had another baby, that makes three kids under 4yrs. old and I’m responsible for paying the bills and I don’t want to screw up our FICO by missing or making late payments. We will most likely do a HELOC when the appraisal of our property goes up. Twelve months ago it was worth 30K more then today, crazy.
we aren’t trying to borrow our way out of debt just trying to keep our great FICO score. A few times in the past a last and miss payment is what damaged our FICO more then anything. So with ONE auto payment to the bank that will keep our score great.

Being a SAHM isn’t easy but it can be a little hectic during Summer break, KWIM?

5 Thoughts on Is a Debt consolidation/personal unsecured loan a good plan?
  1. Reply
    November 22, 2011 at 6:36 pm

    you do know the hELOC is revolving line of credit. Most are interest only for the first 10 years and then repaid over the next ten years.
    I would ask for a fixed rated closed end second for the same amount

  2. Reply
    November 22, 2011 at 7:34 pm

    We have done it before, especially if the interest rates are lower than you pay now. Even if not, sometimes making that one payment, even if for a slightly longer period so you can catch up and ten pay off the loan early. We use second mortgages because you can file it on your taxes,and the interest rates are generally lower in our area.

  3. Reply
    wife of marine
    November 22, 2011 at 8:33 pm

    You have valid concerns regarding the heloc but keep one thing in mind. Rates are really low for the time being. Getting locked in while rates are low is never a bad thing. However, if you are planning on using your entire line up front, then you are not benefiting from the heloc quite as much. The primary benefit of the heloc is only have to pay the interest during the draw period (lovingly we call it happy time). The problem with personal unsecured loan is that the freedom of no collateral means big time interest because it is a much much higher risk for your financial institution. Having a good relationship with your bank will help you along the way. Get to know your account officer and make sure you don’t settle for one who is only interested in pushing their product on you.

  4. Reply
    November 22, 2011 at 9:06 pm

    you can`t borrow yourself out of debt. why not concentrate on getting higher interest loans paid down or off first?

  5. Reply
    Debt Guru
    November 22, 2011 at 9:53 pm

    When consolidating credit card debt, it is important to be aware that shifting unsecured debt (credit cards are unsecured) to secured debt (your mortgage is secured by your home) can create a volatile situation, if there is ever a chance that you cannot afford the new mortgage payment you are now putting yourself at risk of foreclosure.

    If you can get approved for the personal unsecured loan for the amount that you need, definitely go for it. But, make sure you payoff the credit cards and auto loans and be really careful not to rack up any more debt.

    You are wise in staying away from the HELOC. Nobody can predict what’s going to happen with this housing market so safeguard your equity for now. Once the market stabilizes you can maybe then go for a home equity loan or a cash out refi and pay back the personal loan.

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