I was valuing my time, but I might have gone too far

[clarkfan1979]

I have 4 properties that I wanted to refinance. I completed 2 of them, but I missed out on completing the refinance on the other 2 because I was trying to find a path that was convenient for me and saved me time. Did I go too far?

I re-financed two properties in Colorado in December 2020 (one rental and one primary). I really liked the mortgage broker because he knows how to handle rental income and he was able to do both refinances at the same time, which saved me time.

Upon closing, he mentioned that his brokerage was merging with a bank in March 2021 and they will be able to do loans in all 50 states. He was aware of one rental in Florida and another in Hawaii. I replied with, "Great, can't wait"

I emailed him in March 2021 and the merged didn't happen yet, but will happen soon. I ending up waiting until August 2021 before I started shopping around for another mortgage broker. Rates in August 2021 were around 2.85%, so a rental re-finance (no cash out) would be around 3.625% to 3.75% with 1 or 2 points. I was currently at 4.875% with a loan start date of November 2019 and 4.5% with a loan start date of June 2018. 

When I started to shop around for another mortgage broker, I wanted one person to make it more convenient for me. I didn't want to use two separate brokers for two separate transactions. 

I shopped around for 3 months and didn't find anyone that could do both Hawaii and Florida. By January 2022, it was no longer cost effective to refinance.

If I was able to refinance at 3.75% for each rental, my payment would have gone down by $135/month for one rental an $360/month for another rental for a total of $495/month of savings. I think the principle pay down would be around the same as the previous loans. 

I may have gotten a little greedy with my time, wanting the perfect situation, which is now costing me $495/month. It wouldn't have been ideal, but I could have used two separate mortgage brokers for two separate transactions.

Does anyone else have any stories in which they have done something similar and now later have some regret? 

[wageslave23]

Yeah mine usually revolve around hiring someone to do work on my rental houses or doing the work myself.  Its always a tradeoff.  Dicking around with contractors to get the work done, or doing it myself.  I never know which one is going to be more efficient ahead of time.  Usually just doing it myself ends up taking up the same amount of my time as calling around and micromanaging a shody job that takes too long.

[Sibley]

The perfect is the enemy of the good. Of course everyone's done stuff like this. Learn from it and try not to do it again.

[Chris Pascale]

Sorry you're missing out (or so it seems).

Is there still room to re-fi?

[clarkfan1979]

Sorry you're missing out (or so it seems).

Is there still room to re-fi?

I still have plenty of equity, but refinancing into a lower rate is no longer possible. I was trying to do it in August 2021 when regular rates were 2.85% and I could have got a re-finance on a rental for 3.675%.

It no longer became cost effective when regular rates hit 3.75% in January 2022. Now rates are 5.875%, so it's not even close. 

[Dicey]

Your existing rates are still below market and the interest is tax deductible? Sounds like an MPP for sure.

About a year ago, we dropped two of our rentals from 4.275 to 3.375, with reasonable fees. We did the first one and the lender was so easy to work with, we did another one. The third one didn't pencil out.

On April 4, 2022, we paid cash for a condo, intending to renovate it, then slap a cheap mortgage on it. Now it's "worth" less than we paid for it, not including the renovations. Looks like our cash is going to be tied up for a while. Happily, it's a buy-and-hold situation, so we don't care.

You win some, you lose some. In the end, it all works out.

[ChpBstrd]

I sort of did the opposite and refinanced by mortgage in August 2020 to a 15y loan at 3.25% even though my existing loan (4.25% I think?) was only a couple of years old. I jumped the gun though, and rates fell below 3% mere months later - not enough to make paying a 3rd set of closing costs on the same house within 4 years worthwhile, but still a regretful MPP.

I suppose if I had "valued my time" just a little more I would have dawdled on the refi until it was absolutely irresistible and then locked in the <3% rates. But if I had been just a little more distracted/lazy than that, I might have waited until January 2022 and then it would have been too late.

I console myself by noting that I did the math on the ROI. The closing costs I paid have a solid ROI and breakeven within a few years. Also I was correct that the bottom was at least near, and that prompt action was needed to secure the benefits before this opportunity evaporated. I got a good outcome, though not a perfect outcome, and I need to be happy enough with that.

In general the lesson is to allocate time and attention proportionate to the amount of money at stake. With mortgages, investments, taxes, etc. there is a lot of money at stake but we often focus our attention on a never-ending string of things in the $20 category.

[clarkfan1979]

I sort of did the opposite and refinanced by mortgage in August 2020 to a 15y loan at 3.25% even though my existing loan (4.25% I think?) was only a couple of years old. I jumped the gun though, and rates fell below 3% mere months later - not enough to make paying a 3rd set of closing costs on the same house within 4 years worthwhile, but still a regretful MPP.

I suppose if I had "valued my time" just a little more I would have dawdled on the refi until it was absolutely irresistible and then locked in the <3% rates. But if I had been just a little more distracted/lazy than that, I might have waited until January 2022 and then it would have been too late.

I console myself by noting that I did the math on the ROI. The closing costs I paid have a solid ROI and breakeven within a few years. Also I was correct that the bottom was at least near, and that prompt action was needed to secure the benefits before this opportunity evaporated. I got a good outcome, though not a perfect outcome, and I need to be happy enough with that.

In general the lesson is to allocate time and attention proportionate to the amount of money at stake. With mortgages, investments, taxes, etc. there is a lot of money at stake but we often focus our attention on a never-ending string of things in the $20 category.

I think this is a good point and part of the lesson. When considering the potential of refinancing two rental properties, a high amount of money and savings was at stake. I think I was overly concerned with trying to save 50-100 hours of my time. I was feeling confident because the last refinance went well. I wanted to replicate it, but it didn't happen.   

[wageslave23]

I sort of did the opposite and refinanced by mortgage in August 2020 to a 15y loan at 3.25% even though my existing loan (4.25% I think?) was only a couple of years old. I jumped the gun though, and rates fell below 3% mere months later - not enough to make paying a 3rd set of closing costs on the same house within 4 years worthwhile, but still a regretful MPP.

I suppose if I had "valued my time" just a little more I would have dawdled on the refi until it was absolutely irresistible and then locked in the <3% rates. But if I had been just a little more distracted/lazy than that, I might have waited until January 2022 and then it would have been too late.

I console myself by noting that I did the math on the ROI. The closing costs I paid have a solid ROI and breakeven within a few years. Also I was correct that the bottom was at least near, and that prompt action was needed to secure the benefits before this opportunity evaporated. I got a good outcome, though not a perfect outcome, and I need to be happy enough with that.

In general the lesson is to allocate time and attention proportionate to the amount of money at stake. With mortgages, investments, taxes, etc. there is a lot of money at stake but we often focus our attention on a never-ending string of things in the $20 category.

I think this is a good point and part of the lesson. When considering the potential of refinancing two rental properties, a high amount of money and savings was at stake. I think I was overly concerned with trying to save 50-100 hours of my time. I was feeling confident because the last refinance went well. I wanted to replicate it, but it didn't happen.

Yikes that sounds like a lot of time for a refinance.  Send two paystubs, recent mortgage statement for each property, last two years tax returns, answer a few questions, sign a few documents.  I would guess my refis have been about 4 hours of my time each.

[clarkfan1979]

I sort of did the opposite and refinanced by mortgage in August 2020 to a 15y loan at 3.25% even though my existing loan (4.25% I think?) was only a couple of years old. I jumped the gun though, and rates fell below 3% mere months later - not enough to make paying a 3rd set of closing costs on the same house within 4 years worthwhile, but still a regretful MPP.

I suppose if I had "valued my time" just a little more I would have dawdled on the refi until it was absolutely irresistible and then locked in the <3% rates. But if I had been just a little more distracted/lazy than that, I might have waited until January 2022 and then it would have been too late.

I console myself by noting that I did the math on the ROI. The closing costs I paid have a solid ROI and breakeven within a few years. Also I was correct that the bottom was at least near, and that prompt action was needed to secure the benefits before this opportunity evaporated. I got a good outcome, though not a perfect outcome, and I need to be happy enough with that.

In general the lesson is to allocate time and attention proportionate to the amount of money at stake. With mortgages, investments, taxes, etc. there is a lot of money at stake but we often focus our attention on a never-ending string of things in the $20 category.

I think this is a good point and part of the lesson. When considering the potential of refinancing two rental properties, a high amount of money and savings was at stake. I think I was overly concerned with trying to save 50-100 hours of my time. I was feeling confident because the last refinance went well. I wanted to replicate it, but it didn't happen.

Yikes that sounds like a lot of time for a refinance.  Send two paystubs, recent mortgage statement for each property, last two years tax returns, answer a few questions, sign a few documents.  I would guess my refis have been about 4 hours of my time each.

I also need to provide last 3 months of all retirement accounts and checking/savings. I need documentation of property taxes and insurance for 4 different properties. My wife has a 1099 job and it runs through a venmo account and various bank accounts. I need documentation on that as well.

I had to write a 200 word essay explaining cash flow in and out of my various accounts. Which money was rental income and which money was 1099 income. 

When you do two re-finances at once with separate brokers, it creates additional problems. You have to explain to each side what the other side is doing. I did two separate re-finances at the same time in October 2019 with two separate brokers. It was extremely time consuming and not very fun.

In December 2020, I had the same broker for two separate refinances. It was much easier. I was trying to replicate that experience in August 2021, but I couldn't find a mortgage broker that was licensed in Hawaii and Florida. What has been explained to me is that Hawaii is a "brick and mortar" state for mortgages. In order to do a loan in Hawaii you need to work for an institution that has a physical location in the state of Hawaii.

The only benefit to my search is that I found someone that is licensed in Colorado and Hawaii. I like them and I might use them in the future.   

[Paul der Krake]

With everything that involves timing and luck, sometimes you win, sometimes you lose.

I procrastinated for weeks in March 2020 when I should have been rebalancing my portfolio as soon as it went out whack by more than my predefined band. But I didn't. I don't even have a good excuse: I had plenty of time during the day, was fully aware of what was going on in the markets, and had no idea whether stonks would drop further. I just... didn't do it, and by pure luck finally did on the very day that the market hit bottom.

My inexcusable laziness made me a couple tens of thousands of dollars, but I'd be an even greater fool to conclude that procrastinating is the way to go next time.