Creatively Paying For Your Upcoming Wedding
Creatively financing your wedding
Sara, Mesa, Arizona:
"My fiancĂ© and I have lived together for 6 years and have a
$70,000.00 mortgage at an 8.5% interest rate on our $200,000.00 home. We
have a few other small debts (under $5,000.00 total) that I have
consolidated onto very low interest credit cards.
We want to have a wedding and honeymoon, but he says we cant afford it.
I handle most of our finances, and I believe if we are creative, we can
afford it. The wedding budget I am considering is about $15,000.00. In
addition, our honeymoon will cost about $4,000.00.
He thinks this is extravagant for us, and he thinks the additional debt
would be painful, but I want to celebrate our life together with a dream
wedding. What can I do to convince him we can afford this?"
Sara, you are right. If you are creative, you can do this with
little to no financial pain and lots of romantic gain. It sounds as if
you and your fiancĂ© agree that you want a special wedding celebration.
However, you may not be in agreement about the size and style of this
wedding. Before you resume your planning, be sure your vision for the
event is in accord with your fiancĂ©s. Discuss the design and scope of
the wedding and preferences for the honeymoon, and then look at the
You have an excellent equity position in your home, a six-year payment
history on your mortgage, and a stable relationship. Given these facts,
you have some viable options many other couples planning a wedding do
not have. Since your current mortgage interest rate is 8.5% and the
average market rate is below 7%, you may want to consider refinancing
your home. If you do, you can pull some cash out of the new loan and use
it for your wedding.
For example, for the $70,000.00 left on your mortgage at 8.5%, your
monthly payment is approximately $534.00 (principal and interest only).
If you refinance that amount and add the cost of your wedding, the
honeymoon, and closing costs for the refinance, your new mortgage loan
amount would be $91,000.00. At a mortgage rate of 6.75%, your monthly
payment on this amount would be approximately $586.00 (principal and
interest only). (This is at face value and is for example purposes only.
There are many unknown variables like insurance and taxes that are not
taken into consideration in this example.)
You add about $52.00 to your current monthly mortgage payment, reduce
your mortgage rate, and take cash out for your wedding and honeymoon.
Your mortgage loan has tax advantages, too. Obviously, rates and terms
vary. Call a loan officer at a bank or mortgage company to get good
For comparison purposes, your budgeted wedding costs on a low interest
credit card at around 9% would require a monthly payment about twice the
$52.00 you are adding to your mortgage payment in the refinancing
scenario. In addition, you are accruing finance charges on the credit
card loan each month, and there would not be the same tax benefit to
this consumer debt.
Once you explain the financial reality of paying for the romantic
wedding you want, your fiancĂ© may agree that its worth every penny.
Borrowing in this way also leaves a 55% equity position in your home,
which is very important.
Caution to my readers: This couple can consider financing their wedding
over a long period of time by rolling it into their new mortgage because
they have a long, stable relationship and a proven record of financial
responsibility. Their options are not available to every couple. One
thing Sara does not mention is the accumulation of some savings. All
couples should consider building savings, no matter their income level.
Remember to increase savings as you increase your income.
Additional information on this topic:
Wedding plans? -- Financial considerations; where to start
How much debt is too much?
Paying for the wedding
Shared wedding costs
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