Author Topic: Refinance to ensure FIRE?  (Read 7571 times)

Rollin

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Refinance to ensure FIRE?
« on: July 14, 2015, 10:13:58 AM »
I知 working towards RE at the end of this year.  My income/expenditure calculations reveal that I知 just about where I need to be regarding income to cover expected expenses for many years, however I知 a little nervous as to whether or not I値l have enough (or if I made a big spreadsheet mistake) during the time-frame that I have calculated (to 2023, as our expenses drop considerably after that, but income shows slight increase each year).  Sound familiar? 

So, just to be sure and instead of OMY (One More Year) I was contemplating refinancing my mortgage to reduce my year to year expenses.  I壇 like to hear some of your thoughts on this.

Presently, I am almost 2 years into a 15 year mortgage at 2.85%.  I owe $175,000 (house value of approx. $300,000) and all told my monthly payment is right at $2,100 (I round up a few dollars on my payment).  If I refinance to 30 years the payment will drop to about $1,350.  This extra $750/month would easily cover any gaps or underestimations that I might have made.
I thought that I could take a wait and see attitude and refinance next year if need be, but I知 thinking that an increase in the rates might be a deterrent.  Also, I have not gotten a list of the fees associated with the refinance yet, and those could dissuade me as well.  Lastly, getting started this year would help me to build more of a stache.
Your thoughts?

gReed Smith

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Re: Refinance to ensure FIRE?
« Reply #1 on: July 14, 2015, 10:36:50 AM »
I probably wouldn't RE with a mortgage.  Although you're likely to do better than 2.85% on investments over the next 15 years, if there is a market correction, you will be forced to withdraw the mortgage amount while the market is down.  My preference would be to pay off the mortgage.

Cycling Stache

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Re: Refinance to ensure FIRE?
« Reply #2 on: July 14, 2015, 10:47:56 AM »
Do you have a home equity line of credit (HELOC)?  If not, I'd set that up while you're still employed as a way to tap principal in the house if ever needed.

You're current mortgage rate is fantastic, and the extra money is going to principal, so you're not losing the money.  If you really need money down the road, you have options.  If a short-term need, you could tap the HELOC; if a long-term need, you could refinance to a longer-term mortgage at that time.  But I wouldn't do it now and incur guaranteed costs and probably a higher interest rate for the chance that you might need the money in the future if your projections are otherwise good.

MDM

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Re: Refinance to ensure FIRE?
« Reply #3 on: July 14, 2015, 10:59:05 AM »
Presently, I am almost 2 years into a 15 year mortgage at 2.85%.  ...  If I refinance to 30 years the payment will drop to about $1,350.  This extra $750/month would easily cover any gaps or underestimations that I might have made.
Yes, if you can get 2.85% on a 30 year mortgage for reasonable closing fees that would be a great deal!  But that's a big "if".  Get the quotes on the 30 year and see....

Cheddar Stacker

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Re: Refinance to ensure FIRE?
« Reply #4 on: July 14, 2015, 11:18:34 AM »
Rollin, your suggestion is nearly my exact plan. Instead of a refinance though, I'm going to move and get a 30 year mortgage shortly before I FIRE. Currently a 2.875% 15 year loan and about 2 years in. Currently owe about $175K. Eerily similar to your numbers, although our monthly payment is much lower.

I would also make sure you get a HELOC if you don't have one already.

I probably wouldn't RE with a mortgage.  Although you're likely to do better than 2.85% on investments over the next 15 years, if there is a market correction, you will be forced to withdraw the mortgage amount while the market is down.  My preference would be to pay off the mortgage.

To each their own, but the part I bolded is just not true if you provide yourself some options:

Dividend income
HELOC
Cash holdings
Bonds
Annuities
Rental income
Continual earned income from part-time work.

I plan to FIRE with everything I listed above except the annuities. Any one of these items can provide the cash flow you need in a down market to cover the mortgage payment.

frugaliknowit

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Re: Refinance to ensure FIRE?
« Reply #5 on: July 14, 2015, 11:19:09 AM »
No, leave it alone.  You've got a great rate.  Even if you did not, I do not subscribe to the "you can earn a higher rate than the mortgage..."  Plus, it would probably cost you at least 2% to refinance (yeah, I'm "shooting from the hip", but that's probably about right...).

Mother Fussbudget

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Re: Refinance to ensure FIRE?
« Reply #6 on: July 14, 2015, 11:54:56 AM »
There are a lot of factors at play regarding whether you should have a mortgage in FIRE.  Some (I among them) subscribe that the INTEREST RATE TAX DEDUCTION is a good thing to maintain during FIRE, and so specifically *WANT* to have a mortgage during FIRE (as they have few other tax deductions).  But it all depends on whether you'll have more deductions from your mortgage interest than taking the standard deduction.  Also, some think of a mortgage as like-a-bond - you're paying  3.75% interest toward an asset that could be sold at a future date.   Therefore because you're LIVING in the home, you're getting more benefit than the 3.75% - you'll collect at least 3.75% (if not more) appreciation when you (or your heirs) sell the home at a future date. 

I'm currently re-financing via PenFed Federal CU - some of the best rates going - and I'm getting a 30 year fixed @ 3.75%.  Bottom line:  you have to answer for yourself, do you want to have the additional expense of a mortgage during FIRE? 
If you DO, you get the Interest tax deduction.  If you DON'T, the game is to keep your 'income' as close to the 15% rate threshold as possible.  (or if you're really serious about it, the game is to pay $0 tax - like GoCurryCracker(.com) the Seattle mustachian who's last 2 years of 1040's I've read on-line).   

*DO* research those 30 year fixed interest rates before you decide ANYTHING.  They've been inching up over the summer.
« Last Edit: July 14, 2015, 12:08:46 PM by Mother Fussbudget »

Cheddar Stacker

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Re: Refinance to ensure FIRE?
« Reply #7 on: July 14, 2015, 12:11:17 PM »
Stuff.

I agree with your post. I just got a kick out of then seeing this in your signature line:

No debt, and on-track for FI in 4 years

: )

Rollin

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Re: Refinance to ensure FIRE?
« Reply #8 on: July 14, 2015, 12:30:36 PM »
I probably wouldn't RE with a mortgage.  Although you're likely to do better than 2.85% on investments over the next 15 years, if there is a market correction, you will be forced to withdraw the mortgage amount while the market is down.  My preference would be to pay off the mortgage.

That means that I'd have to wait 13 more years and would put me at 63 years old!:)   Anyway, maybe you are saying that because you assume that I have a huge chunk of cash in the market and if it crashes..., but the majority of my income is very stable (pension and life insurance annuity for example) and don't relate to market conditions.  Did I read that wrong?

Rollin

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Re: Refinance to ensure FIRE?
« Reply #9 on: July 14, 2015, 12:31:13 PM »
Do you have a home equity line of credit (HELOC)?  If not, I'd set that up while you're still employed as a way to tap principal in the house if ever needed.

You're current mortgage rate is fantastic, and the extra money is going to principal, so you're not losing the money.  If you really need money down the road, you have options.  If a short-term need, you could tap the HELOC; if a long-term need, you could refinance to a longer-term mortgage at that time.  But I wouldn't do it now and incur guaranteed costs and probably a higher interest rate for the chance that you might need the money in the future if your projections are otherwise good.

Never thought of getting a HELOC - great back up plan - thank you.

Rollin

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Re: Refinance to ensure FIRE?
« Reply #10 on: July 14, 2015, 12:33:24 PM »
Rollin, your suggestion is nearly my exact plan. Instead of a refinance though, I'm going to move and get a 30 year mortgage shortly before I FIRE. Currently a 2.875% 15 year loan and about 2 years in. Currently owe about $175K. Eerily similar to your numbers, although our monthly payment is much lower.

I would also make sure you get a HELOC if you don't have one already.

I probably wouldn't RE with a mortgage.  Although you're likely to do better than 2.85% on investments over the next 15 years, if there is a market correction, you will be forced to withdraw the mortgage amount while the market is down.  My preference would be to pay off the mortgage.

To each their own, but the part I bolded is just not true if you provide yourself some options:

Dividend income
HELOC
Cash holdings
Bonds
Annuities
Rental income
Continual earned income from part-time work.

I plan to FIRE with everything I listed above except the annuities. Any one of these items can provide the cash flow you need in a down market to cover the mortgage payment.

That is funny!  I wonder why your payment is lower, but probably due to lower taxes and insurance.  Also, eery that I have similar income sources!

Rollin

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Re: Refinance to ensure FIRE?
« Reply #11 on: July 14, 2015, 12:36:17 PM »
No, leave it alone.  You've got a great rate.  Even if you did not, I do not subscribe to the "you can earn a higher rate than the mortgage..."  Plus, it would probably cost you at least 2% to refinance (yeah, I'm "shooting from the hip", but that's probably about right...).

I may leave it alone, but if so I'll need a little more part-time income.  I'm working a few lines on part-time work, but I'm trying to not need it.  That is what I have had in my mind my entire life.  That is, I don't mind working, I just want to HAVE TO work.  Make sense?

Rollin

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Re: Refinance to ensure FIRE?
« Reply #12 on: July 14, 2015, 12:36:49 PM »
BTW - how do you grab multiple posts and respond in one post??

MDM

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Re: Refinance to ensure FIRE?
« Reply #13 on: July 14, 2015, 12:58:20 PM »
BTW - how do you grab multiple posts and respond in one post??
First hit the Quote button for the original post.

Then, while you have the reply window open, scroll down to the previous posts below the reply window and click Insert Quote.  Like this:
No, leave it alone.  You've got a great rate.  Even if you did not, I do not subscribe to the "you can earn a higher rate than the mortgage..."  Plus, it would probably cost you at least 2% to refinance (yeah, I'm "shooting from the hip", but that's probably about right...).

I may leave it alone, but if so I'll need a little more part-time income.  I'm working a few lines on part-time work, but I'm trying to not need it.  That is what I have had in my mind my entire life.  That is, I don't mind working, I just want to HAVE TO work.  Make sense?

regulator

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Re: Refinance to ensure FIRE?
« Reply #14 on: July 14, 2015, 01:36:47 PM »
No, leave it alone.  You've got a great rate.  Even if you did not, I do not subscribe to the "you can earn a higher rate than the mortgage..."  Plus, it would probably cost you at least 2% to refinance (yeah, I'm "shooting from the hip", but that's probably about right...).

I may leave it alone, but if so I'll need a little more part-time income.  I'm working a few lines on part-time work, but I'm trying to not need it.  That is what I have had in my mind my entire life.  That is, I don't mind working, I just want to HAVE TO work.  Make sense?

Makes sense to me.  In your shoes if the only thing holding me back was a bit of cushion on income vs. costs I would not hesitate to refi into a 3 year.  Do the HELOC as well.

Rollin

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Re: Refinance to ensure FIRE?
« Reply #15 on: July 14, 2015, 02:14:02 PM »
BTW - how do you grab multiple posts and respond in one post??
First hit the Quote button for the original post.

Then, while you have the reply window open, scroll down to the previous posts below the reply window and click Insert Quote.  Like this:
No, leave it alone.  You've got a great rate.  Even if you did not, I do not subscribe to the "you can earn a higher rate than the mortgage..."  Plus, it would probably cost you at least 2% to refinance (yeah, I'm "shooting from the hip", but that's probably about right...).

I may leave it alone, but if so I'll need a little more part-time income.  I'm working a few lines on part-time work, but I'm trying to not need it.  That is what I have had in my mind my entire life.  That is, I don't mind working, I just want to HAVE TO work.  Make sense?



BTW - how do you grab multiple posts and respond in one post??

Got it!

Thank you.

Rollin

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Re: Refinance to ensure FIRE?
« Reply #16 on: July 14, 2015, 05:40:33 PM »
Okay, got the numbers back and approx. $3,075 in closing costs.  Payment goes down to $1,325 from $2,100.  That's $775 in reduced expenses. Now I need to weigh my longterm costs, like how much now goes to pay principle vs. starting over - and overall costs even though we'll probably be here less than 10 more years.

Further thoughts?

desk_jockey

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Re: Refinance to ensure FIRE?
« Reply #17 on: July 14, 2015, 05:52:22 PM »
That's $775 in reduced monthly outgoing cash flow.  If you are like many here and back-out the payment towards principle from your expenses then it will likely be around $600 difference in expenses. 

Cycling Stache

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Re: Refinance to ensure FIRE?
« Reply #18 on: July 14, 2015, 05:53:30 PM »
Okay, got the numbers back and approx. $3,075 in closing costs.  Payment goes down to $1,325 from $2,100.  That's $775 in reduced expenses. Now I need to weigh my longterm costs, like how much now goes to pay principle vs. starting over - and overall costs even though we'll probably be here less than 10 more years.

Further thoughts?

I think the basic question is what is the most likely impact of the current mortgage payment versus the lower payment on your projected need to work.  If you're just insuring against a risk that things might not go well, $3k seems like a high cost for that (plus the additional interest you'll have to pay the bank).  If it will really affect your need to work as you've currently calculated it, then maybe it's worth it.

MDM

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Re: Refinance to ensure FIRE?
« Reply #19 on: July 14, 2015, 05:57:53 PM »
Presently, I am almost 2 years into a 15 year mortgage at 2.85%.  I owe $175,000 (house value of approx. $300,000) and all told my monthly payment is right at $2,100 (I round up a few dollars on my payment). 

Okay, got the numbers back and approx. $3,075 in closing costs.  Payment goes down to $1,325 from $2,100.  That's $775 in reduced expenses. Now I need to weigh my longterm costs, like how much now goes to pay principle vs. starting over - and overall costs even though we'll probably be here less than 10 more years.

Assuming "almost 2 years into" means "after 1 year and 10 months" your original loan amount was ~$194,570 (given a 2.85% rate on a 15 year mortgage with current balance of $175K).

The mortgage payment on that is ~$1,330/mo.  Is the extra $770 mostly for escrowed taxes and insurance?

Financing $175,000 at 2.85% (do you get to keep this rate?) over 30 years gives a monthly payment of ~$724, or $606 less than your current payment.

The numbers here (using Excel's PMT and related functions) are different from what you are getting.  There is that assumption at the beginning of this post, and the difference between "mortgage only" vs. "PITI" payments - can you clarify?

Rollin

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Re: Refinance to ensure FIRE?
« Reply #20 on: July 14, 2015, 07:11:19 PM »
Presently, I am almost 2 years into a 15 year mortgage at 2.85%.  I owe $175,000 (house value of approx. $300,000) and all told my monthly payment is right at $2,100 (I round up a few dollars on my payment). 

Okay, got the numbers back and approx. $3,075 in closing costs.  Payment goes down to $1,325 from $2,100.  That's $775 in reduced expenses. Now I need to weigh my longterm costs, like how much now goes to pay principle vs. starting over - and overall costs even though we'll probably be here less than 10 more years.

Assuming "almost 2 years into" means "after 1 year and 10 months" your original loan amount was ~$194,570 (given a 2.85% rate on a 15 year mortgage with current balance of $175K).

The mortgage payment on that is ~$1,330/mo.  Is the extra $770 mostly for escrowed taxes and insurance?

Financing $175,000 at 2.85% (do you get to keep this rate?) over 30 years gives a monthly payment of ~$724, or $606 less than your current payment.

The numbers here (using Excel's PMT and related functions) are different from what you are getting.  There is that assumption at the beginning of this post, and the difference between "mortgage only" vs. "PITI" payments - can you clarify?

I'm paying $2,083 for principle, interest, hazard insurance, and taxes.  I'm trying to find my closing papers at the moment as I think we closed 11/2013.  Original loan was somewhere around $200,000, and right now $1,007 is going towards principle and $672 towards escrow ($421 interest).  $174,714 outstanding principle.

Rollin

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Re: Refinance to ensure FIRE?
« Reply #21 on: July 14, 2015, 07:13:57 PM »
Rollin, your suggestion is nearly my exact plan. Instead of a refinance though, I'm going to move and get a 30 year mortgage shortly before I FIRE. Currently a 2.875% 15 year loan and about 2 years in. Currently owe about $175K. Eerily similar to your numbers, although our monthly payment is much lower.

Okay, even weirder is that I just double-checked and instead of 2.85 I have 2.875%!!

regulator

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Re: Refinance to ensure FIRE?
« Reply #22 on: July 14, 2015, 08:31:19 PM »
I intentionally paid a thousand bucks to refi a 3.5% ARM to a 3.5% 30 year FRM.  Why?  Two reasons:

- certainty of cashflow

- inflation protection.  A 30 means that if we get into a nasty inflationary spiral (killer of many retirements, historically), I have a net short of almost 200k in long term bonds.

I semi-ERd with this mortgage in place.  27 years to go...

Another thought:

I always took 15 year mortgages and paid extra on top of the scheduled payment.  When we moved in 2011 and bought a new place, I vowed I would never take shorter than 30 years and never pay off a dollar of pribcipal early.  Why?  Rates are historically low and when the shit hit the fan who got bailed out? That's right, the irresponsible shitbags who borrowed too much for too long.  Tired of being the sucker.

Rollin

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Re: Refinance to ensure FIRE?
« Reply #23 on: July 15, 2015, 05:16:39 AM »
I intentionally paid a thousand bucks to refi a 3.5% ARM to a 3.5% 30 year FRM.  Why?  Two reasons:

- certainty of cashflow

- inflation protection.  A 30 means that if we get into a nasty inflationary spiral (killer of many retirements, historically), I have a net short of almost 200k in long term bonds.

I semi-ERd with this mortgage in place.  27 years to go...

Another thought:

I always took 15 year mortgages and paid extra on top of the scheduled payment.  When we moved in 2011 and bought a new place, I vowed I would never take shorter than 30 years and never pay off a dollar of pribcipal early.  Why?  Rates are historically low and when the shit hit the fan who got bailed out? That's right, the irresponsible shitbags who borrowed too much for too long.  Tired of being the sucker.

During my 20s, 30s, 40s, and starting into my 50's I was always paying extra on my mortgage and was debt free (two houses) for many years.  Now that I see I can RE with lowering my expenses by refinancing it doesn't seem to make as much sense.  The question simplified for me (maybe overly so at this point) is: 1) keep paying off the 15 year mortgage and work another few years; or 2) RE at the end of this year.  Not sure I want to do another few years time...
« Last Edit: July 15, 2015, 07:10:06 AM by Rollin »

Rollin

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Re: Refinance to ensure FIRE?
« Reply #24 on: July 15, 2015, 08:40:09 AM »
Presently, I am almost 2 years into a 15 year mortgage at 2.85%.  I owe $175,000 (house value of approx. $300,000) and all told my monthly payment is right at $2,100 (I round up a few dollars on my payment). 

Okay, got the numbers back and approx. $3,075 in closing costs.  Payment goes down to $1,325 from $2,100.  That's $775 in reduced expenses. Now I need to weigh my longterm costs, like how much now goes to pay principle vs. starting over - and overall costs even though we'll probably be here less than 10 more years.

Assuming "almost 2 years into" means "after 1 year and 10 months" your original loan amount was ~$194,570 (given a 2.85% rate on a 15 year mortgage with current balance of $175K).

The mortgage payment on that is ~$1,330/mo.  Is the extra $770 mostly for escrowed taxes and insurance?

Financing $175,000 at 2.85% (do you get to keep this rate?) over 30 years gives a monthly payment of ~$724, or $606 less than your current payment.

The numbers here (using Excel's PMT and related functions) are different from what you are getting.  There is that assumption at the beginning of this post, and the difference between "mortgage only" vs. "PITI" payments - can you clarify?

Let me tell you that there are too many things bopping around in my head and I need a break!  I told you all that I've been in the house for almost 2 years, but I just saw some paperwork that says it was around October of 2012! (not 11/13).

I'm not happy with losing that kind of information.  It just shows that one can only be involved in so many things before the quality drops off - at least that is what happens to me.

Sorry about the mis-information, but thank you for the advice.
« Last Edit: July 15, 2015, 06:57:56 PM by Rollin »

Mother Fussbudget

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Re: Refinance to ensure FIRE?
« Reply #25 on: July 15, 2015, 04:33:27 PM »
Stuff.

I agree with your post. I just got a kick out of then seeing this in your signature line:

No debt, and on-track for FI in 4 years

: )


LOL!  Yes, this speaks to my twisted mindset regarding mortgages.
 
I do NOT think of a mortgage as "debt" - I think of it as "monthly tax deductible housing expense that works like a savings bond".  (in that you're paying X% for a tangible asset that generally appreciates at around that percentage rate per year - and it can be redeemed [i.e. 'sold'] at any point. My father drilled into me that "a mortgage is a method of forced savings" so much so that it's hard for me to think of it any other way.)

Rollin

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Re: Refinance to ensure FIRE?
« Reply #26 on: July 17, 2015, 12:52:53 PM »
I知 working towards RE at the end of this year.  My income/expenditure calculations reveal that I知 just about where I need to be regarding income to cover expected expenses for many years, however I知 a little nervous as to whether or not I値l have enough (or if I made a big spreadsheet mistake) during the time-frame that I have calculated (to 2023, as our expenses drop considerably after that, but income shows slight increase each year).  Sound familiar? 

So, just to be sure and instead of OMY (One More Year) I was contemplating refinancing my mortgage to reduce my year to year expenses.  I壇 like to hear some of your thoughts on this.

Presently, I am almost 2 years 3 Years into a 15 year mortgage at 2.85%.  I owe $175,000 (house value of approx. $300,000) and all told my monthly payment is right at $2,100 (I round up a few dollars on my payment - $2,086 to be closer to exact).  If I refinance to 30 years the payment will drop to about $1,350 $1,330.  This extra $750$771/month would easily cover any gaps or underestimations that I might have made.
I thought that I could take a wait and see attitude and refinance next year if need be, but I知 thinking that an increase in the rates might be a deterrent.  Also, I have not gotten a list of the fees associated with the refinance yet, and those could dissuade me as well.  Lastly, getting started this year would help me to build more of a stache.
Your thoughts?

Corrected above.  Tough to find this information on my account website!

Original loan amount $206,400 at 2.875% - 15 years
New loan of $175,000 at 4% -30 years (approx. $3,000 in closing costs)

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Re: Refinance to ensure FIRE?
« Reply #27 on: July 17, 2015, 01:54:18 PM »
So you are or just about are FIRE with a mortgage of $2100/ month, which is $25,200 per year.  At a 4% SWR that means you should have $630,000 invested just to cover your mortgage.  If you do (and you might not because you mentioned annuities earlier) can you withdraw $175,000 and pay off the mortgage? 

I'm also a couple years into a 15 yr mortgage and considered a 30 year to be able to FIRE in 5 years.  However, I need less money to pay off the mortgage than I need in investments generate monthly mortgage payments of either a 15 or 30 yr.    Or another way, I'll have to work longer to save up 25 times my annual mortgage payment than to save up the mortgage balance.


Rollin

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Re: Refinance to ensure FIRE?
« Reply #28 on: July 17, 2015, 02:04:13 PM »
So you are or just about are FIRE with a mortgage of $2100/ month, which is $25,200 per year.  At a 4% SWR that means you should have $630,000 invested just to cover your mortgage.  If you do (and you might not because you mentioned annuities earlier) can you withdraw $175,000 and pay off the mortgage? 

I'm also a couple years into a 15 yr mortgage and considered a 30 year to be able to FIRE in 5 years.  However, I need less money to pay off the mortgage than I need in investments generate monthly mortgage payments of either a 15 or 30 yr.    Or another way, I'll have to work longer to save up 25 times my annual mortgage payment than to save up the mortgage balance.

My income sources vary and will only rely on SWR of 4% on about $400k invested.  The rest comes from annuity, pension, rental income, DW's income, and a couple of other sources so it's hard to answer that question with a simple yes.  However, with my income set/steady instead of trying to raise it or go OMY, I am working to lower expenses - therefore going from $2100 down to $1330 on the mortgage (regardless of adding interest and closing costs as spread out over a longer run).

MDM

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Re: Refinance to ensure FIRE?
« Reply #29 on: July 17, 2015, 04:03:11 PM »
So you are or just about are FIRE with a mortgage of $2100/ month, which is $25,200 per year.  At a 4% SWR that means you should have $630,000 invested just to cover your mortgage.
No, no, no.  Apples vs. oranges.  Don't conflate SWR (Trinity study looking at worst market performance and expenses increasing with inflation) with mortgage payments (fixed expense with definite time period). 

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If you do (and you might not because you mentioned annuities earlier) can you withdraw $175,000 and pay off the mortgage?
Yes, yes, yes.  This is the way to look at it: take your "stash needed for everything except mortage" (retirement expenses divided by your choice of Withdrawal Rate) and add the principal due on the mortgage to get your "total retirement stash needed".  One can make defensible arguments for adding "a little more than" or "a little less than" the principal due, so here we're splitting the difference.

MDM

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Re: Refinance to ensure FIRE?
« Reply #30 on: July 17, 2015, 04:23:10 PM »
I知 working towards RE at the end of this year.  My income/expenditure calculations reveal that I知 just about where I need to be regarding income to cover expected expenses for many years, however I知 a little nervous as to whether or not I値l have enough (or if I made a big spreadsheet mistake) during the time-frame that I have calculated (to 2023, as our expenses drop considerably after that, but income shows slight increase each year).  Sound familiar? 

So, just to be sure and instead of OMY (One More Year) I was contemplating refinancing my mortgage to reduce my year to year expenses.  I壇 like to hear some of your thoughts on this.

Presently, I am almost 2 years 3 Years into a 15 year mortgage at 2.85%.  I owe $175,000 (house value of approx. $300,000) and all told my monthly payment is right at $2,100 (I round up a few dollars on my payment - $2,086 to be closer to exact).  If I refinance to 30 years the payment will drop to about $1,350 $1,330.  This extra $750$771/month would easily cover any gaps or underestimations that I might have made.
I thought that I could take a wait and see attitude and refinance next year if need be, but I知 thinking that an increase in the rates might be a deterrent.  Also, I have not gotten a list of the fees associated with the refinance yet, and those could dissuade me as well.  Lastly, getting started this year would help me to build more of a stache.
Your thoughts?
Corrected above.  Tough to find this information on my account website!
That's where something like Quicken would help.

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Original loan amount $206,400 at 2.875% - 15 years
New loan of $175,000 at 4% -30 years (approx. $3,000 in closing costs)

Assuming you are 2 yrs 9 mos into the original loan, you will pay $32,810 in interest in the next 12 years 3 months.

Switching to the new loan you will pay $75,042 in interest over that same 12 years 3 months (plus the $3,000 closing costs) - and still owe $127,200.

Just something to consider....

Rosy

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Re: Refinance to ensure FIRE?
« Reply #31 on: July 17, 2015, 04:38:39 PM »
Assuming you are 2 yrs 9 mos into the original loan, you will pay $32,810 in interest in the next 12 years 3 months.

Switching to the new loan you will pay $75,042 in interest over that same 12 years 3 months (plus the $3,000 closing costs) - and still owe $127,200.

Just something to consider....


Yes - it is changing my perspective, thank you. Tough decisions, Rollin - best of luck!

Rollin

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Re: Refinance to ensure FIRE?
« Reply #32 on: July 17, 2015, 05:36:39 PM »
Assuming you are 2 yrs 9 mos into the original loan, you will pay $32,810 in interest in the next 12 years 3 months.

Switching to the new loan you will pay $75,042 in interest over that same 12 years 3 months (plus the $3,000 closing costs) - and still owe $127,200.

Just something to consider....


Yes - it is changing my perspective, thank you. Tough decisions, Rollin - best of luck!

Rosy - thank you for that.  I'll put that to some thought - and information I was looking for tomorrow with the broker.

I'll have to factor in how long I'll actually pay on it, as we may move in 5-10 years. Of course in the long run the current mortgage is the beat financially.  I'm almost buying some freedom by going to the 30 year.  I dunno for sure yet which way I'll go.