Hello guys,

This is my first post. I am a 28 yr old guy working for a credit card company. A year ago I bought a condo overseas. The price was close to 325k.

I took a 10 year mortgage for 150K at around 10% (Interest rates are high there), took a 5-yr 401k loan of 30K (4.25%) and some credit cards close to 40K (20K at 4.99% for life, 3K at 7.24% life, rest at 0%). Rest came from my savings and from my parents.

As of now, I still have 125K left on my mortgage (strong dollar helped a bit) , 24k on 401K loan and 30K on CC (16K at 4.99%, 2.7K at 7.24%, 10.5K at 0% expiring later this year).

I have 6K which will go towards paying off my CC. I will have to pay off the 0% CC by mid of this year.

I have 24K remaining in my 401K loan. I will continue making payments.

I really want to pay off my mortagage as it has a high interest rate.


I make around 115K. Contribute 12K yearly to 401K. I have 62K in it, excluding loan.
After 401K loan payment, I get 2100 biweekly.

Monthly Expenses:
Loan payments - $1500 mortgage, $500 credit card,
Rent , food,gas,etc - $1000

I have a $1000 remaining per month.
Should I use this to pay off my mortgage early?

If I just pay my payment and contribute my bonus every year, I would payoff mortgage in 2017. I would like to close it much earlier. A second 401k loan would cut it to mid 2014.

I want to move the loan to US as I want to take advantage of rates here. Would any credit unions offer loans for me. I know my CC debt is high but I can pay it off within 12-15 months

How about lending club?

Any other sources?

No replies ............................................??

You can't "move" a mortgage loan because it is tied to the property. You might theoretically be able to get an unsecured loan that you could use to pay off the mortgage loan. However, it seems unlikely to me that you'll be able to get an unsecured loan that large with an interest rate less than 10%. I don't think you could enough money from get credit card teaser rates and lending club.

An interest rate of 10% seems worth paying early. Do you have a prepayment penalty?

Why did you buy the condo? Who is living in it?

I bought it as an investment. It was a good deal, price hit bottom in the area in 2009.
I put 20K in and remodelled it. It is worth bit more than $400K now.

My parents live in it and pay $600 towards mortgage and also take care of the fees.
There is no prepayment penalty for the loan.

I agree that it seems worth paying early. But it would be good to know where it is. Which country? What kind of area is it in? I'm asking because if the currency is appreciating against the USD then your real rate could be much lower. Is appreciation a factor?

The place is in CBD of an Indian city.

Inflation there is around 10%. So that why the interest rates are high. Currency depreciated against USD by 10-12% in last 1 year. Local currency should stabilize once global economy gets better.

If the currency is depreciating at 10-12% and if you are making your income in USD then the rate is not actually 10% to you. It is nearly zero.

I don't know enough about real estate in India to comment but it sounds like something worth running number on.

Yes, my rate was essentially zero last year becoz of the currency depreciation.

Strong USD right now is also another reason I want to move this loan.

Just an update. Lucky me, the currency depreciated another 10%.

I owe 11K less on my mortgage.

I think you need to take currency out of the equation. If you think you know which way the currency is going to move then you should just quit your job and become a currency trader..you could make a lot of money. That's always the attitude I have taken towards foreign currency.

For example, what makes you think the rupee is going to appreciate against the dollar? If India wants to grow it needs a weak currency. The best currency traders in the world all thought the Yen would crash after the tsunami...it did just the opposite.

So, ignoring currency what would you do? 10% is a high interest rate in the US, maybe not in India where you have high inflation.

Also, are you an American citizen? Are you familiar with the new foreign financial asset reporting rules with the IRS? I'm not sure if real estate falls under these new rules, but you should take a look.

I am thinking of prepaying the loan slowly in the next 20 months, which is the reason for watching currencies and trying to time it. I make money in dollars so this is a big deal to me. My payments have gone down a lot. I used to make $1500 payments, now $1100 seems enough.

I am not a Citizen. I am familiar with the tax consequences. I would incur capital gains only when I sell and do not buy another home. I do not see it happening. I would not stay in this country for long, I plan to move to Hong Kong/Singapore once the global economy turns better in the next 3-4 years. I would not move the money out of rupees and would definitely not bring to US as I do not see good opportunities.

I agree that trying to time currency movements is extremely difficult.

But I don't think you can take currency out of this decision. The OP earns in dollars and has an expense in rupees. Everything must be converted to a functional currency in order to make decisions rationally. Doing so does not imply control or being able to time things. It just provides a framework for making decisions. You can try different exchange rate scenarios to see how they impact the decision and then go from there.

I got couple of excel spreadsheets with couple of scenarios on currency rates.
I am however trying to payoff as much as possible.

Just an update to my progress.

Got a raise this year at my work, but my expenses also went up.

Now make around 130K, should hit 150K in the next year or so.
Also might be able to pick up some work on the side and make an extra 20-40K, but I am not sure if it is worth the effort, given the high marginal tax rates.

I closed my 401K loan by using lending club, BT and some savings. The reason for this is I wanted to borrow more, 50K from it but I had to wait one year from the payoff from last loan. My workplace offers 4.25% and I can continue making payments even if I switch jobs, which makes it a good deal.

My Debt
CC - 27K at 4.24% (Close to 60% of this BT for Life) - $600 payment
Lending Club - 8K at 7.6% (Orgination fee payed upfront, 8.99% APR) - $300 payment
Mortgage - 103K at 10.5% - $1500 payment

FICO is at 705 now. Should go up to 720 once I bring my CC balance to under 25K in the next month or so.

Here is how I plan to pay off my mortgage loan.
2012 Bonus + Tax Refunds + 2K Extra money (Jan-May) 17K - 82K Balance
401k Loan 50K + 2K Extra Money (July) 52K - 28K Balance
Use part of 2013 Bonus and payoff the loan by April 2014. After July (28K Balance), most of my payments are pricinpal only, interest component is pretty small.

Now I am wondering if I can close the loan in July itself by getting 28K from another source. Interest expense is around 1,600.

Other areas to get unsecured loans are expensive,
Propser is expensive, Credit Unions (Penfed, etc) are at 9%.
Do not want to tack on more CC debt and cannot do Home Equity as I rent.

Are there more places to consider for a two year loan at low interest rates.

Also comment on my payment plan. I am allocating most of my extra money to paydown my debt. Just do not want to compromise my minimal lifestyle, I spend 1K on essentials and another 1K on travel, shopping, etc.