Paying off financed purchase faster...?

[rusafee1183]

We financed our recent DVC purchase with the intention of paying off as fast as possible. I intend on making an additional payment as frequently as possible, but then I saw on another board that someone lumped their payment in with their mortgage. Does anyone know how this is possible or how to go about this? We were actually just talking about refinancing our mortgage soon, and it would be really nice if I could somehow "lump" these 2 payments together.

I have never done anything like this before, so I apologize if this is a stupid question!!

Thanks!

 

[belias21]

I'd assume they're either talking about refinancing or taking out a home equity loan.

If you're refinancing (and you have equity), you should have the ability to get a new loan for the amount of your original mortgage plus "cash back." For example...

Original mortgage remaining principal = $100,000
DVC Loan remaining principal = $7,000
Take out a new loan for $107,000 (+ closing costs), hopefully at a lower interest rate than your original mortgage. Your new lender pays off your old mortgage and either directly sends a payoff to DVC or gives you a check to pay it off. You pay only the new mortgage payments going forward.

A home equity loan is simply a NEW additional loan backed by the equity that you have in your home. Generally, they have a nice low interest rate and can be used to pay off loans with higher rates.

Good luck!

 

[erionm]

If you financed direct with DVC, it's considered a mortgage. You can make additional mortgage payments on your DVC loan in several ways.

You could mail payment to:
Disney Vacation Club
ATTN: Member Accounting
PO Box 470727
Celebration, FL 34747-0727

Or make additional payments on-line using a major credit card.

There is no penalty for paying off your loan early.

 

[BestDadEver]

I wouldn't lump it into a refi if you want to pay it off early . A equity loan would be better cause it's a separate loan .

Also with your current loan the intrest is tax dedctable . I am not sure how refi will effect that

 

[ssawka]

It is risky to replace unsecured debt with secured debt, especially when it is your home. Think of it this way: If god forbid something happens and you can no longer make your DVC payments, you loose DVC; but if you cannot make your mortgage payment because you've borrowed too much, you risk losing your home.

 

[rusafee1183]

These are all great points.

It's hard to accept an 11% interest rate when the possibility of a 4-5% interest rate was dangled in front of me. I think more than likely we will not lump anything together though. I will just try to make additional payments as often as possible.


We didn't want to keep waiting to buy, so we financed - but now I just want to get these payments over with....

 

[DannysMom]

These are all great points.

It's hard to accept an 11% interest rate when the possibility of a 4-5% interest rate was dangled in front of me. I think more than likely we will not lump anything together though. I will just try to make additional payments as often as possible.

We didn't want to keep waiting to buy, so we financed - but now I just want to get these payments over with....

How is your credit? You might be able to get an unsecured personal loan from a banking institution that you already do business with-- not sure if the interest rate would be significantly better than what you are paying.

DH & I have really good credit and credit cards (with high limits) that we keep without balances. We keep getting offers of 0% for 1 year from our credit card companies. Of course you need to KNOW that you can pay off the balance inside of the year or you will get hit with a lot of interest as soon as the promotional period expires.

If neither of these options are feasible just keep throwing extra money at your current loan to get it paid ASAP.

 

[rusafee1183]

How is your credit? You might be able to get an unsecured personal loan from a banking institution that you already do business with-- not sure if the interest rate would be significantly better than what you are paying.

DH & I have really good credit and credit cards (with high limits) that we keep without balances. We keep getting offers of 0% for 1 year from our credit card companies. Of course you need to KNOW that you can pay off the balance inside of the year or you will get hit with a lot of interest as soon as the promotional period expires.

If neither of these options are feasible just keep throwing extra money at your current loan to get it paid ASAP.

Our credit is relatively good. It has been improving every year. We do have high credit card limits that are not completely empty, but we are always current with payments and never ever pay the minimum. I'm not sure that I would be able to pay off the entire balance within a year, so I don't know that a 0% credit card would work - but I do wonder if a personal loan would work well for us depending on the interest rate.

Thanks for the advice!

I am going to talk to an advisor with my bank sometime next week, so hopefully they will be able to direct me somewhere that can save us some money.

I know that we went about this the irresponsible way by financing, but I at least want to be smart about it from here on out and not lose more money than I have to on this investment.

 

[kylmac]

We use our home equity loan to pay off DVC-much better interest rate!
Elizabeth

 

[ELMC]

These are all great points.

It's hard to accept an 11% interest rate when the possibility of a 4-5% interest rate was dangled in front of me. I think more than likely we will not lump anything together though. I will just try to make additional payments as often as possible.


We didn't want to keep waiting to buy, so we financed - but now I just want to get these payments over with....

This is not an "I told you so" post. It's not intended to be and I really hope that it's not read that way. But yours is a good cautionary tale for those who choose to buy and finance. In the excitement of the moment, I think many people look right past the rate and what it really means and just focus on the joy of owning DVC. Then when the dust settles and you find yourself stuck with that ugly 11%, it's not as joyful.

In your particular situation, I wish you the best of luck. Mortgage companies are really tight right now and getting what you want might be difficult. What I would suggest is talking to your refinancing agent and asking him to not only refi your mortgage but to open a HELOC (Home Equity Line of Credit). Tell him you want to have it to do improvements, consolidate debt, rainy day fund, whatever. See if you can open that at the same time as the mortgage but keep it as a separate account. You may run into some problems if you don't have 20% equity in your home, but if you do you should have no problem. The rates on HELOCs are ridiculously low right now. Good luck, please keep us posted!

 

[rusafee1183]

This is not an "I told you so" post. It's not intended to be and I really hope that it's not read that way. But yours is a good cautionary tale for those who choose to buy and finance. In the excitement of the moment, I think many people look right past the rate and what it really means and just focus on the joy of owning DVC. Then when the dust settles and you find yourself stuck with that ugly 11%, it's not as joyful.

In your particular situation, I wish you the best of luck. Mortgage companies are really tight right now and getting what you want might be difficult. What I would suggest is talking to your refinancing agent and asking him to not only refi your mortgage but to open a HELOC (Home Equity Line of Credit). Tell him you want to have it to do improvements, consolidate debt, rainy day fund, whatever. See if you can open that at the same time as the mortgage but keep it as a separate account. You may run into some problems if you don't have 20% equity in your home, but if you do you should have no problem. The rates on HELOCs are ridiculously low right now. Good luck, please keep us posted!

It's not coming across demeaning or "know it all" at all. Believe me - you can spot those posts a mile away. And you are right! We should have waited and saved. But, we did think about it and we did know what we were doing. We conciously chose to continue on and finance rather than show some patience and just save before we bought.

Was it the *most responsible*? No. Did I get the *best possible deal*. Definitely, no. But, still I am not unhappy with our choice or filled with regret about the way that we went about it. We are still really happy and at peace with it.

I just hope that we can find a way to make this work for the best for us here on out.

Thanks again! I will definitely keep everyone posted on how it all turns out!

 

[ssawka]

Now one thing that I have not seen on this post is a mention of deducting the interest paid on your DVC loan. A loan through Disney is not technically an unsecured loan since it is backed by an interest is a real estate property. As such, it is considered a mortgage, and may be tax deductible. Check with a tax advisor.

 

[marynvince]

How is your credit? You might be able to get an unsecured personal loan from a banking institution that you already do business with-- not sure if the interest rate would be significantly better than what you are paying.

DH & I have really good credit and credit cards (with high limits) that we keep without balances. We keep getting offers of 0% for 1 year from our credit card companies. Of course you need to KNOW that you can pay off the balance inside of the year or you will get hit with a lot of interest as soon as the promotional period expires.

If neither of these options are feasible just keep throwing extra money at your current loan to get it paid ASAP.

You are NOT getting a true 0% interest for 1 year. Lenders can not offer these anymore. If you read the fine print, you have to pay a fee of x% of the amount used. In effect, this is your interest rate for that year.