Continue with Marriot Loan or no?

[Mila78]

Hi everyone. I am an owner at Marriot SurfWatch. I currently am 1 year into a 10yr loan at 13.49% financing with Marriott. I have the possibliity of switching to a 7% loan which I could pay off faster due to less interest. What I am nervous of is losing all the Marriott points that are involved when you finance with Marriott. Since the point system just changed though, I am thinking it might be as big of an idea as before the change.

What do you guys think? Do you think that its worth to lose all those points to have a better interest rate? I'm really torn here.

Thanks
Mila

 

[lll1929]

If you have the ability to shift the loan to a lower rate, I would say do it!!

The points that are gained from financing are devalued with the new program.

You can use the difference in the payment amts to purchase marriott points. I believe you get 50,000 pts per year for financing. You can purchase those 50,000 point for $625 a year.

 

[vacationtime1]

You would be saving 6-1/2% interest per year for nine years. That is an enormous difference. Refinance the loan.

 

[Mila78]

If you have the ability to shift the loan to a lower rate, I would say do it!!

The points that are gained from financing are devalued with the new program.

You can use the difference in the payment amts to purchase marriott points. I believe you get 50,000 pts per year for financing. You can purchase those 50,000 point for $625 a year.

Wow, I'll definitely save more than $625 a year. So its a no-brainer then.

Thanks for your responses!

 

[Zac495]

Out of curiosity - what about the income tax deduction? Does that off-set the interest at all? Do you get a deduction because you own a titled, deeded property or because you have a mortgage on it?

 

[thinze3]

Out of curiosity - what about the income tax deduction? Does that off-set the interest at all? Do you get a deduction because you own a titled, deeded property or because you have a mortgage on it?

Ellen makes a good point. On most Marriott loans the interest is deductable while on most other loans it is not. Maybe Dave can tell you about the difference.

Terry

 

[rsnash]

If the lower rate loan is somehow connected to your primary residence home equity (i.e a "Line of Credit" or "Home Equity Loan") then that would qualify for tax detectability. If it tied to a credit card or other non-collateral loan then it would not.

(I'm not an accountant or anything, just pretty sure on this one, but check with your accountant or other tax professional to confirm.)

 

[gorevs9]

Hi everyone. I am an owner at Marriot SurfWatch. I currently am 1 year into a 10yr loan at 13.49% financing with Marriott. I have the possibliity of switching to a 7% loan which I could pay off faster due to less interest.

If the lower rate loan is somehow connected to your primary residence home equity (i.e a "Line of Credit" or "Home Equity Loan") then that would qualify for tax detectability. If it tied to a credit card or other non-collateral loan then it would not.

Yes, take the lower rate, but will there be extra closing costs (some LOCs waive application fees, closing costs, etc)?
Refinancing to a lower rate AND making the extra payment, would probably reduce the loan by a couple years. Paying less interest would reduce any "tax savings" anyway.

IMHO, 7% would be high for a home equity line of credit (mine is currently 4.5%). Without knowing the loan balance or his tax bracket, it 's difficult to predict any savings. Assuming Mila owes a large sum ($20K or higher), the savings in interest, even if not deductable, will far surpass the tax savings (unless they are in a really high tax bracket)

 

[Ask_A_Rep]

You no longer will get points (50,000 per year) for keeping financing anyway. All the other points were not contingent on keeping financing since about a year ago.

 

[Mila78]

Yes, take the lower rate, but will there be extra closing costs (some LOCs waive application fees, closing costs, etc)?
Refinancing to a lower rate AND making the extra payment, would probably reduce the loan by a couple years. Paying less interest would reduce any "tax savings" anyway.

IMHO, 7% would be high for a home equity line of credit (mine is currently 4.5%). Without knowing the loan balance or his tax bracket, it 's difficult to predict any savings. Assuming Mila owes a large sum ($20K or higher), the savings in interest, even if not deductable, will far surpass the tax savings (unless they are in a really high tax bracket)

It is actually a personal loan. I am not a homeowner. So there are no closing fees involved since according to Marriott, I would just be "paying it off".

The sum is $34,000 that I would be borrowing (dont ask, i didnt know about TUG when I purchased from Marriott!).

My current payment is around $525 a month over a 10 year period (of which I am 1 year completed).

If I do it at 7%, I can have the entire loan paid off in 5 more years by only increasing my monthly payment by $148 (which I can definitely swing).

At 13.49 over the 10 year period, my payments are around $525. so for $148 more a month and by switching to a personal loan, I am shaving off 4 years.

 

[Mila78]

Wow.. this just answered my question!

http://tugbbs.com/forums/showthread.php?p=622158#post622158

 

[gorevs9]

One more suggestion...

If I do it at 7%, I can have the entire loan paid off in 5 more years by only increasing my monthly payment by $148 (which I can definitely swing).

If you have any other debt (credit cards, car loans, school loans, etc) that exceed 7% interest, apply the $148 extra/month towards those loan(s) first, then use THAT extra $$ to pay off the TS loan.

Don't fret too much about overpaying for a TS, you are not the first and you won't be the last. Learn the system and enjoy the experience.

I commend you for refinancng and paying your loan as opposed to others who would just moan about high payments and try to find out how they can avoid them.

 

[Mila78]

If you have any other debt (credit cards, car loans, school loans, etc) that exceed 7% interest, apply the $148 extra/month towards those loan(s) first, then use THAT extra $$ to pay off the TS loan.

Don't fret too much about overpaying for a TS, you are not the first and you won't be the last. Learn the system and enjoy the experience.

I commend you for refinancng and paying your loan as opposed to others who would just moan about high payments and try to find out how they can avoid them.

Thanks excellent advice! I actually don't have any other debt that exceeds 7% interest but I didn't even consider that until you said it! This would be the best place then for the extra $148 considering all of my interest rates.

 

[Vacation Dude]

The sum is $34,000 that I would be borrowing (dont ask, i didnt know about TUG when I purchased from Marriott!).

My current payment is around $525 a month over a 10 year period (of which I am 1 year completed).

Are you really paying $6,300 per year (loan) + annual dues ($1,000) = $7,300 per year?

Wow, that is over $1,000 per night for the next 10 years.

After 10 years, you would have paid $73,000 or more if my math is correct.

Where did you buy, how many bedrooms, etc?

 

[Mila78]

Are you really paying $6,300 per year (loan) + annual dues ($1,000) = $7,300 per year?

Wow, that is over $1,000 per night for the next 10 years.

After 10 years, you would have paid $73,000 or more if my math is correct.

Where did you buy, how many bedrooms, etc?

SurfWatch, 2BR, Ocean View (hangs head in shame)


Edited to add: My plan was always to refinance if thats any consolation

Edited to add again: WOW, ID SAVE AROUND $20,000 IF I DO A LOAN AT 4.5% WHICH I THINK I CAN GET...

 

[Vacation Dude]

SurfWatch, 2BR, Ocean View (hangs head in shame)


Edited to add: My plan was always to refinance if thats any consolation

Edited to add again: WOW, ID SAVE $21,230 IF I TAKE OUT THIS LOAN!

I think anything you can do to lower the cost is a good thing.