# Debt Consolidation - Anyone ever take advantage of this? **URL:** \ **Category:** Shift518 Off Topic\ **Created:** [February 26, 2010, 8:25am UTC](https://forums.speedlife.net/t/debt-consolidation-anyone-ever-take-advantage-of-this/250555 "2010-02-26T08:25:27Z")\ **Posts on this page:** 1\ **Showing post:** 5
**Author:** ![OsoiNA6](https://yyz2.discourse-cdn.com/flex034/user_avatar/forums.speedlife.net/osoina6/32/6301_2.png) [@OsoiNA6](https://forums.speedlife.net/u/OsoiNA6)\ **Post date:** [February 26, 2010, 9:42am UTC](https://forums.speedlife.net/t/debt-consolidation-anyone-ever-take-advantage-of-this/250555/5 "2010-02-26T09:42:45Z")
> [@5/20 Nyspeed BBQ @ Chestnut Ridge \*\*PAYMENT INFO INSIDE\*\*](https://forums.speedlife.net/t/5-20-nyspeed-bbq-chestnut-ridge-payment-info-inside/24869/472): > > I received a letter in the mail from Embrace Home loans offering to consolidate my debts. > > I did a little research so far and can’t see anything negative about the company. They have an A+ rating with the BBB, and shows they are in good standing since 1983. I found a few blogs from people using it and they seem to have no issues with it. So it got me thinking and I took a good look at my books. > > **My situation: I purchased a home last year, made a lot of improvements to it and I am sure it will appraise for well over what i have invested into it.** I checked my credit report and it is good, but not the numbers I wanted to see. I have no late or delinquent notices on my reports > > I made some **major payments on my 24% credit card and that will be paid off this month.** The other one is @ **9.24% which isn’t bad but I carry a $4,200 balance** on it. I don’t intend on putting any more balance on that, just keep paying it off. I supposed I could call them and ask them to lower the rates, but I don’t intend on using the cards anymore but it would still be smart to try to lower it to pay it off better. I also have a **school loan outstanding @ %3.37**. Which is good. **My car payment is @ 8.99%**. **My mortgage rate it 5%**. With the exception of that one card, which I am sure I could ask them to lower it, my interest rates are rather good I think. > > I have about **$1200 worth of medical bills** I need to pay for from my accident in the fall. I also have plans to build a garage at the house in the spring. I **est about $16-$20K for that building. I would also like to purchase a lift $2K or so, and some more needed tools, Plasma cutter, newer MIG and some other fab tools maybe**. Also I think I may be having to pay a bunch in taxes this year, because **I failed to save the money I made on the side** that is going to be taxed. > > If I were to take advantage of this program **I stand to save $600+ a year in interest with consolidating my auto loan, credit cards, and even putting my school loan into this (even though its currently 1.7% lower atm)**. My car would be paid off, my school loan would be paid off and my credit cards would be paid off. **I would only have to deal with making one payment a month instead of 4, (2 really are manual the others are auto paid). And it will help me keep my checking account in balance with only having to watch for 1 deduction a month instead of 4 spread out.** > > With the garage, tools and outstanding bills, those can be rolled into this program too. Now I understand that I can also apply for a home equity loan which is basically the same thing this program is doing, and it would be at the same %APR. But I think it would be better that way to have it with the same lender, credit wise. But would that path allow me to pay off my credit cards, auto loan, school loan, also? > > **My wife, probably wont like me putting my bills into the house payment (our payment) so I might have to put the garage on a home equity loan** and do my debt consolidation on my own. > > This is my first house, and I am not up to par on my financial knowledge, and I know a bunch of you here are and could give me some helpful advice. > > My questions are: > Will a home equity loan allow me to put credit card balances, school loans, auto loans, minor outstanding bills, tax payments and the garage into one loan? > With moving that school loan into the consolidation program be a dumb move making it increase %1.7? Is it better to keep paying it off as is or just pay it off completely with this program? OK so since it’s a home equity loan (and not home equity line of credit (HELOC), I’m assuming this is for a fixed amount (adding up all the $ you owe, plus your mortgage) at a FIXED rate. If it’s a HELOC, the interest rate can usually vary, especially if it’s open ended (where you have the option choose when and how often to borrow against equity). Either way, BEWARE and read EVERYTHING, like three times. “Embrace” Home Loans? Yeah, more like embrace your lawyer 'cause you and him are gonna be real tight… :lol Anyways, I’ve had a relative and couple of close friends burned by a home equity loan, but in these cases the fine print is really what killed it, as the interest rate crept up and things got out of control quickly. You don’t mention what the actual rate is, but I assume it’s somewhere better than those credit cards and maybe slightly better (or maybe worse) than your car payment rate. This is kind of beside the point but I’ll throw it out there. The way it sounds, your outstanding debts right now are unsecured, meaning that the bank is kind of lending you money in good faith with no collateral attached to the debts. I’m referring to your car payment, your credit cards, school loan, etc. When you take out equity against your own home, you turn that equity (and therefore part of your home) into collateral, turning this unsecured debt into secured debt. For me personally this kills it right there, because should you default on any payments, now this lender can go after you for the collateral (your home). For the next part, don’t take this the wrong way as it’s just an opinion and none of my business really, but you put it out there so here goes… If you do not have an extremely stable job and don’t have at least an “emergency” fund worth a couple months living expenses, it sounds like a risky proposition to me. As for the other stuff I highlighted above (lower half really), it sounds to me like you don’t have tremendous discipline financially, especially if you have credit cards at high interest rates with balances on them and have to pay back taxes on “money on the side”. I am going out on a limb here and assuming you don’t have a lot of $ put aside for an eventual emergency because if you do, why is it not being used to pay off the other debts at relatively high rates? (You don’t have to explain, this is just me thinking out loud) The way this is written it sounds like you’re tricking yourself into thinking you are “saving” $600 per year with this home equity / consolidation deal but the truth is you have certain wants (who doesn’t?), but are describing a nice garage and extra tools as a need, and then thinking this will help you better “afford” them? You NEVER save money by spending money. I would vote totally against buying these niceties and for not turning unsecured debt into secured (where your home becomes collateral), primarily for the reasons mentioned above, not to mention your spouse is against it. My opinion is, borrowing against your home equity is something to be done only when it’s a total emergency and/or you are doing it for future financial gain (i.e. you already maxed out student loans but are borrowing money for another degree that will help you earn more in the future) Again, you put it out there so I’m going to comment, but are these things really worth arguing with your wife about at the end of the day? That’s on you to decide I guess… You’ve done a good thing keeping your payments up to date and stepping up and buying a house and all that… I would just hate to see a bunch of ill $hit happen just because of some mail solicitation and a desire for a a garage, and some fancy tools. --- _[View the full topic](https://forums.speedlife.net/t/debt-consolidation-anyone-ever-take-advantage-of-this/250555)._