At the time of my last update on our home equity loan application process, we had been conditionally approved, pending the results of the title search and our full-house appraisal. Both have been received, and we’re inching toward closing. However, the waters have been muddied a bit. Here’s how:
The loan will be only in my husband’s name. We made this call because he is by-far the primary earner in our family. Also, his credit score is slightly higher than mine, although both of ours are considered very good. What we didn’t think would matter at the time was that not all of our credit cards with balances on them are in his name. In fact, they’re all in my name, and he’s on some of my accounts.
Because his debt-to-income ratio is considered high – Did I mention that his grad school loan and our remaining car loan are in his name, too? – the loan payments will be made out directly to the cards in his name, and will have to be closed. Immediately. This is kind of a bummer, because this will negatively impact my credit score, which otherwise probably would’ve been the stronger of the two, after the loan closes. The remaining amount of the loan – about $16,000 – will be paid out to him, and we’ll apply it to the cards only in my name.
Here are the balances that will be paid directly by the bank:
- Chase 1: $21,927.44
- Chase 2: $3,722.85
- Discover: $15,593.03
- Wells Fargo: $854.02
Readers familiar with my monthly debt totals may wonder why they’ve never seen the Wells Fargo balance before. This is our one-year-no-interest furniture loan. At the onset, we calculated what our monthly payments would need to be to pay it off in under a year, and therefore avoid paying interest. We’ve been paying that amount every month, and the loan will be paid off, without interest, in March. As a result, I do not consider it part of our monthly debt total. Yes, I realize that in the most technical sense, this is inaccurate. But, for me, the monthly debt totals are a tool for tracking debts outside our regular, fixed-amount accounts. (I also don’t include our student loans, mortgage, and car loan for the same reason.)
Anyway, likely by the end of this week, the accounts listed above will be closed. The bank we’re working with on the loan insists that credit card companies will allow us to officially close the accounts before they’ve received final payment on them. This seems a little dubious, but I’m sure they have more experience with this process than we do.
While putting our house on the line definitely makes me nervous, it’ll be nice to consolidate our payments into one, with a much-lower interest rate. Instead of throwing as much money as we can at five different credit cards every month, while all of them are racking up their own higher interest charges, we’ll have one payment and can make extra payments as often as possible.
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