Next week I will be signing some papers at my bank to combine the remaining portion of D's mortgage and car loan responsibilities to open up some investment (cash or real estate) options.
The LOC used for the car loan is at 3.5% and the mortgages are at 2.1% and 2.25%. The combined new rate is 2.3% with a 5 yr amortization (4 yr 6 mnth when paid bi-weekly) at no cost to us for the change.
I have to go and sign because all those loans are in my name. Total amortization for mortgage completion for 2 properties will be essentially less than 8.5 yrs because of the car loan thrown in.
Currently D pays around $1200 bi-weekly to service all three. By combining them, his payments drop to $800 bi-weekly with option to prepay up to 15% yearly.
He won't be doing that. The difference will get saved/invested.
I'm surprising good with this idea. This is as close to a "consolidation" as I've ever got and I can see why people do it now and how easy it is to get in trouble.
Take a $200000 mortgage with a 15 yr amortization and add on $80000 worth of debt and re-amortize it for 30 yrs and voila, monthly payments are easier. Do this a couple of times and you owe more than your house is worth but you have all the toys.