Author Topic: DONT Payoff your Mortgage Club  (Read 359393 times)

Brother Esau

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Re: DONT Payoff your Mortgage Club
« Reply #2050 on: February 11, 2020, 11:34:59 AM »
At the time of our estimated FIRE date, we'll have 2 to 3 years remaining on our mortgage. Will probably pay the balance off then just for convenience sake. Knowing full well that it is not financially optimal.

While I can certainly appreciate the psychological benefits of having a paid off mortgage, is it really more convenient? As it is, my mortgage is in direct deposit with taxes and insurance being paid through an escrow account. With a paid off mortgage, I'll have to pay the insurance and taxes myself. Admittedly, it will only be a few checks per year, but it's still more than I'm writing now.

I hear ya. Maybe I'm also wondering how minimizing expenses & income will help with things like ACA. Haven't really thought it through at this point but the stash will be so far beyond bare bones that it really won't matter either way.

mtnman125

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Re: DONT Payoff your Mortgage Club
« Reply #2051 on: February 11, 2020, 12:12:26 PM »
Are there many of you in this camp that are paying a mortgage in FIRE?

I'm on board during accumulation phase, but can't wrap my head around trying to pay ~$20k/annual in mortgage payments from taxable while maintaining ACA subsidies, Roth conversions, etc.

Would it make sense to change course with 5-7 years to FIRE and send those extra investments towards prepayment- to get to FIRE without a mortgage.  The only other way i could see is taking LTCG tax hit on Taxable account withdrawal to pay off at FIRE.

Thanks- we'll be signing on a non-mustachian mortgage soon and doing my homework.  Planning to get 30yr fixed and invest everything in taxable after maximizing tax sheltered.

At the time of our estimated FIRE date, we'll have 2 to 3 years remaining on our mortgage. Will probably pay the balance off then just for convenience sake. Knowing full well that it is not financially optimal.

If only 2-3 years, I'm sure I'd do the same.  If we do 30 year mortgage- we'll still have 15+ to go when we FIRE, so the tax burden even at reduced LTCG rates would be significant.

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Re: DONT Payoff your Mortgage Club
« Reply #2052 on: February 11, 2020, 05:37:58 PM »
Are there many of you in this camp that are paying a mortgage in FIRE?

I'm on board during accumulation phase, but can't wrap my head around trying to pay ~$20k/annual in mortgage payments from taxable while maintaining ACA subsidies, Roth conversions, etc.

Would it make sense to change course with 5-7 years to FIRE and send those extra investments towards prepayment- to get to FIRE without a mortgage.  The only other way i could see is taking LTCG tax hit on Taxable account withdrawal to pay off at FIRE.

Thanks- we'll be signing on a non-mustachian mortgage soon and doing my homework.  Planning to get 30yr fixed and invest everything in taxable after maximizing tax sheltered.

At the time of our estimated FIRE date, we'll have 2 to 3 years remaining on our mortgage. Will probably pay the balance off then just for convenience sake. Knowing full well that it is not financially optimal.

If only 2-3 years, I'm sure I'd do the same.  If we do 30 year mortgage- we'll still have 15+ to go when we FIRE, so the tax burden even at reduced LTCG rates would be significant.
I'm currently planning to keep my mortgage in FIRE.  Then again, my mortgage is more in the $7500 range per year, so it's not a huge burden.  If at any point it makes sense to pay it off, I'd be fine with that as well.  I don't think it will make a huge difference for me either way.  I'll also be young enough that I'm planning to get private insurance the first several years of FIRE since the cost will still be reasonable.  This will allow me to convert more Traditional money to Roth and harvest some cap gains.  I do have a hard time wrapping my head around how to optimize income to reduce taxes and keep ACA subsidies in early retirement.  I plan to have enough of a buffer that I don't need ACA subsidies at least in the early years.

You're worried about a LTCG hit, but keep in mind that you only pay taxes on the money earned, not the principal you put in.  If you only have a 5-7 year timeframe (where you mentioned paying your mortgage down and you could instead invest), you won't have a ton of capital gains to pay on anything you invest.  And if you do, it means you're paying more taxes because you earned more money so you're still coming out way ahead.

Based on what you said (payments of $20k per year, 15 years left at FIRE), I assumed a $375k mortgage at 3.5% for 30 years.  Assume you start paying extra 10 years in (5 years from FIRE), you'd have to pay an extra $3600/month for 5 years to get the mortgage to 0 in those 5 years.  If instead you invested that $3600/mo at 5%, you'd have $245,842 in 5 years, of which $29,842 would be capital gains.  If you paid 15% tax, you'd still have $241,365 after paying taxes.  Paying normal mortgage payments, your balance would be $235,551 at that time.  So after paying taxes, you'd be ahead by $5814.  If you're in the 20% cap gains bracket, you'd still be ahead ~$4300.  At a 10% rate of return and 20% tax, you'd be $32.5k ahead.  This is all assuming you pay off your mortgage the day you retire.  Obviously, there is a risk of losing money over the 5 years as well, so you'll have to decide if it's worth the additional risk to you.  But I don't think LTCG tax is a good reason to start paying off your mortgage instead of investing 5-7 years out from FIRE.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2053 on: February 12, 2020, 07:58:13 AM »
Our family is now on the sell-side, these low rates are hopefully going to make a lot of buyers think they can suddenly afford to pay more for our house.

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #2054 on: February 12, 2020, 08:08:51 AM »
Our family is now on the sell-side, these low rates are hopefully going to make a lot of buyers think they can suddenly afford to pay more for our house.
Hope you get a bidding war on your home.  Sadly, weve struggled to sell our previous residence, despite the uber-low rates.  Reminds me of the RE addage: all real-estate is local.

DadJokes

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Re: DONT Payoff your Mortgage Club
« Reply #2055 on: March 02, 2020, 12:04:54 PM »
We're at risk of falling off the front page. That would be a travesty!

We refinanced with a VA IRRL less than a year ago to a 30 year 3.875% loan.

However, rates look like they have gone so much lower that it might be worth it to refinance again. We'd have to stick with the VA loan, since I still wouldn't be able to get 20% equity to wipe out PMI (owe 309k - house is worth ~340k).

I really don't want to make my wife sit through the paperwork process again, however, I did find the following offer on Bankrate:

3.25%, reduces payment by $120 per month, and no closing costs.

That's just the online quote. We'll see what they can offer when they reach out to me.

dandarc

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Re: DONT Payoff your Mortgage Club
« Reply #2056 on: March 02, 2020, 12:07:13 PM »
Be careful - "no closing costs" often means "closing costs are added to your loan balance". Although the math often still works, just something to be aware of.

DadJokes

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Re: DONT Payoff your Mortgage Club
« Reply #2057 on: March 02, 2020, 02:07:08 PM »
Be careful - "no closing costs" often means "closing costs are added to your loan balance". Although the math often still works, just something to be aware of.

With a VA loan, if you have at least a 10% disability rating, then you are exempt from funding fees.

Over the phone, the loan officer quoted me a 30 year VA loan at 2.875% (full 1% lower), with total fees (mostly title insurance & transfer tax) of $1,700. The payment would be about $200 less per month.

Sounds like a great deal so far. I guess I should wait on actual paperwork before getting too excited.

YttriumNitrate

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Re: DONT Payoff your Mortgage Club
« Reply #2058 on: March 02, 2020, 02:36:35 PM »
I really don't want to make my wife sit through the paperwork process again, however, I did find the following offer on Bankrate: 3.25%, reduces payment by $120 per month, and no closing costs.

That's basically the loan I just refi-ed into. A 3.25% 30 year loan.

Online mortgage documents are great for disinterested spouses. After spending over an hour or two carefully reviewing the various documents to be signed, I asked my wife to look them over and sign. I think she spent about 45 seconds clicking through where her e-signature needed to be.


achvfi

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Re: DONT Payoff your Mortgage Club
« Reply #2059 on: March 02, 2020, 03:10:07 PM »
I was just wondering about this thread.
Mortgage rates are hitting the bottom again in US. I am seeing 3% for 30 year fixed and 2.5% for 15 fixed.

Anyone wondering about cash out refinance to invest in market or elsewhere?

I have 100k equity in 15 year fixed mortgage. I am considering 30 year fixed cash out refinance to increase cashflow and put the equity(50k) to work. Anyone care to chime in on my logic. Thank you!

Kem

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Re: DONT Payoff your Mortgage Club
« Reply #2060 on: March 02, 2020, 03:55:19 PM »
I believe 30 year fixed refi at a low interest rate is the only way to go - it frees up cashflow that can instead be invested. 

If you believe over the next 30 years your investments are going to average more than 3% (assuming thats what you snag)
And if the cash-out does not negatively impact your financials from a cashflow standpoint (going from 15 to 30 even with cash-out your flows may improve)
And if you can stomach investing 50K - and then sitting through a correction at some point without worry & without locking in unrealized losses

Then yes, this is IMHO a great use of capital via converting a non-productive asset into a productive one.

I did this in 2009, 2012, and again in 2019 all on the same home. 
I check the maths on this at regular intervals vs the lump sum payoff impact to FI numbers & In some cases paying off in lump sum can accelerate FI.
My top threshold is that any cash-out refi must have cashflows that allow for me to turn the home into a rental with $100/m cashflow after all expenses (ignoring deprecation & appreciation at point in time)
« Last Edit: March 02, 2020, 04:02:44 PM by Kem »

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #2061 on: March 02, 2020, 05:10:24 PM »
I was just wondering about this thread.
Mortgage rates are hitting the bottom again in US. I am seeing 3% for 30 year fixed and 2.5% for 15 fixed.

Anyone wondering about cash out refinance to invest in market or elsewhere?

I have 100k equity in 15 year fixed mortgage. I am considering 30 year fixed cash out refinance to increase cashflow and put the equity(50k) to work. Anyone care to chime in on my logic. Thank you!

Frustrates me that we got a 3.7% rate 6 months ago on our new (to us) property.  Rates will have to drop quite a bit further for it to be worth it to refinance, and frankly Im skeptical they will go that low.  Happy to be proven wrong, though.

achvfi

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Re: DONT Payoff your Mortgage Club
« Reply #2062 on: March 03, 2020, 07:31:28 AM »
I believe 30 year fixed refi at a low interest rate is the only way to go - it frees up cashflow that can instead be invested. 

If you believe over the next 30 years your investments are going to average more than 3% (assuming thats what you snag)
And if the cash-out does not negatively impact your financials from a cashflow standpoint (going from 15 to 30 even with cash-out your flows may improve)
And if you can stomach investing 50K - and then sitting through a correction at some point without worry & without locking in unrealized losses

Then yes, this is IMHO a great use of capital via converting a non-productive asset into a productive one.

I did this in 2009, 2012, and again in 2019 all on the same home. 
I check the maths on this at regular intervals vs the lump sum payoff impact to FI numbers & In some cases paying off in lump sum can accelerate FI.
My top threshold is that any cash-out refi must have cashflows that allow for me to turn the home into a rental with $100/m cashflow after all expenses (ignoring deprecation & appreciation at point in time)

Wow, three times cash-out refi in ten years in bull market. Sounds like it worked out great for you assuming its invested. Congratulations! 

Thank you for the insights.

It turns out best mortgage rates i have seen so far are 3.25% for cash-out refi vs 3% for just refi for 30 year fixed. Still a good rate.
It improves cash-flow by $200/m and 55K cash out.

Kem

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Re: DONT Payoff your Mortgage Club
« Reply #2063 on: March 03, 2020, 07:57:32 AM »
It took awhile for me to pull my act together after 'living' myself a nice american dream over the prior decade and as such I had a hole to climb then fill.

The first refi improved cashflow which was used to help eliminate some high-interest bad debt - however I still didn't have a gameplan as my financial advice sources were... terrible... and my cashflow was generally negative. 
 
The second refi was cashout and very minor cashflow improvement.  The cash-out eliminated some more bad debt.  At this point I had a fairly good starting plan to track/optimize spending and invest the difference.  I hadn't found FI literature, but I'd run enough math to know that a path towards FI was possible.  Within a couple of years I was checking refi for investing and was developing a fairly broad understanding of the markets (both stock & real estate).  I went from massive negative networth to a 50+% savings rate over this time constantly seeking efficiency improvements to spending, earnings, and investing.  I made mistakes, but learned a great deal.   

This last refi, the cash-out was invested.  The cashflow allowed, for the first time, a cashflow positive REI option.  I also stepped away from my historical industry to help build a business from scratch as my spending was optimal enough that my investments could cover years of an attempt.

YttriumNitrate

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Re: DONT Payoff your Mortgage Club
« Reply #2064 on: March 03, 2020, 08:40:09 AM »
Frustrates me that we got a 3.7% rate 6 months ago on our new (to us) property.  Rates will have to drop quite a bit further for it to be worth it to refinance, and frankly Im skeptical they will go that low.  Happy to be proven wrong, though.

I just refinanced a 3.7% 30-year loan down to 3.25% with a payback period of under 18 months. Are you sure it's not worth while? Yes, it's annoying that you refi-ed six months ago, but please don't let sunk costs impact your decision.

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #2065 on: March 03, 2020, 08:47:18 AM »
Frustrates me that we got a 3.7% rate 6 months ago on our new (to us) property.  Rates will have to drop quite a bit further for it to be worth it to refinance, and frankly Im skeptical they will go that low.  Happy to be proven wrong, though.

I just refinanced a 3.7% 30-year loan down to 3.25% with a payback period of under 18 months. Are you sure it's not worth while? Yes, it's annoying that you refi-ed six months ago, but please don't let sunk costs impact your decision.

Hmm... maybe I should re-think?  Wasn't a re-fi; this was the mortgage on our new place.
One factor working against us is that our mortgage overall is small ($140k) given the LCOL area.  So payments are already pretty low.  Going from 3.7% to 3.2% saves < $40/mo.  Not sure what our re-financing costs would be but given the fees on our origional morgage I'm guestimating about $2,900.  Which would be a payback period of 6.2 years.

problem is - our best guess is we'll be in this house for 5 more years... and possibly as few as 3.  So my rough-ass calculation of $2,900 in closing costs means rates would need to be below 3% for us to make it back in 4 years. 

Maybe I've way overestimated what it would cost to refinance.  Perhaps I'll make some inquiries.


talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2066 on: March 03, 2020, 08:48:33 AM »
@Kem, your story is one of the reasons I'm surprised that interest-only loans haven't become more popular. As mustachians, getting something like 40% down should be within reach, and we could just sit at that position in perpetuity.

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #2067 on: March 03, 2020, 08:51:48 AM »
@Kem, your story is one of the reasons I'm surprised that interest-only loans haven't become more popular. As mustachians, getting something like 40% down should be within reach, and we could just sit at that position in perpetuity.

Could be wrong, but wasn't interest-only loans one of the things which was made much harder by Dodd-Frank, following all the craptastic loans made which led to the Great Recession? 

freya

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Re: DONT Payoff your Mortgage Club
« Reply #2068 on: March 03, 2020, 08:57:05 AM »
https://www.washingtonpost.com/business/2020/03/03/economy-coronavirus-rate-cuts/

Wow.  Half a percent!!!   I can't wait to see what that does for mortgage rates.

Which brings me to a dilemma.  I'm getting my kitchen redone, so I could refinance not only the mortgage principle but also the renovation costs.  I had planned to pay cash, but...a refi would let me sink that cash into the market instead, probably during/just after a correction.  Should I do it???  My mortgage is currently 3.875% for an amount that's ~35-40% of my home value (I'd been paying it down aggressively).
« Last Edit: March 03, 2020, 09:00:54 AM by freya »

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #2069 on: March 03, 2020, 09:03:08 AM »
https://www.washingtonpost.com/business/2020/03/03/economy-coronavirus-rate-cuts/

Wow.  Half a percent!!!

I can't wait to see what that does for mortgage rates.  A drop to the low 3%'s for a 30 year refinance would be amazing.  Can rates get down that low?
They have in the past.  Others are seeing rates down to 3.25% already.  IIRC five or six years ago one could get a 30y for 3.1% in my area, and 2.49% in Canada (where we previously lived).

Rates do tend to drop much more slowly, but rise quickly.  Banks calculate that the average 30y loan will last only ~7 years before the occupant either moves or refinances.  So the question becomes whether the bank can get more in interest from the mortgage loan or from bonds or similar low-risk investments on average over the next 7 years.

Kem

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Re: DONT Payoff your Mortgage Club
« Reply #2070 on: March 03, 2020, 09:16:08 AM »
@Kem, your story is one of the reasons I'm surprised that interest-only loans haven't become more popular. As mustachians, getting something like 40% down should be within reach, and we could just sit at that position in perpetuity.

I've considered it a number of times - however I could only find 5-7 year terms and with rates so low it has been... emotionally... hard to give up a 30 year lock reset.  If I could find a 30 year interest only loan below 4% interest - I would pounce.   

Instead, I've looked to optimize the home's capital and leave the asset in my control as a potential rental (not so much for cashflow, but for tax efficiency( deprecation ) & principal paydown opening the door for cheap future leverage).  Everytime I've run the numbers - so long as the property cashflows $150/month after expenses including a long term maintenance sinking fund (ignoring depreciation & appreciation) then the reward over vacancy/bad tennants/etc is in my favour. 

My view is that I never own the home anyway as the gov via taxation or eminent domain will always be the #1 lien holder - they sure like to give an illusion of home 'ownership'.
« Last Edit: March 03, 2020, 09:18:46 AM by Kem »

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #2071 on: March 03, 2020, 09:22:34 AM »
@Kem, your story is one of the reasons I'm surprised that interest-only loans haven't become more popular. As mustachians, getting something like 40% down should be within reach, and we could just sit at that position in perpetuity.

I've considered it a number of times - however I could only find 5-7 year terms and with rates so low it has been... emotionally... hard to give up a 30 year lock reset.  If I could find a 30 year interest only loan below 4% interest - I would pounce.   

Instead, I've looked to optimize the home's capital and leave the asset in my control as a potential rental (not so much for cashflow, but for tax efficiency( deprecation ) & principal paydown opening the door for cheap future leverage).  Everytime I've run the numbers - so long as the property cashflows $150/month after expenses including a long term maintenance sinking fund (ignoring depreciation & appreciation) then the reward over vacancy/bad tennants/etc is in my favour. 

My view is that I never own the home anyway as the gov via taxation or eminent domain will always be the #1 lien holder - they sure like to give an illusion of home 'ownership'.

I guess I've never understood or bought-into this notion of permanent, irrevocable ownership of a piece of land.  Seems enormously presumptuous as a species and as a culture to think 'this is my land forever'. 

I wonder how our attitudes might change if we instead had no ownership but merely paid rent (albeit at much lower levels) to inhabit a property, with decadal time-frames.

YttriumNitrate

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Re: DONT Payoff your Mortgage Club
« Reply #2072 on: March 03, 2020, 09:28:49 AM »
Hmm... maybe I should re-think?  Wasn't a re-fi; this was the mortgage on our new place.
One factor working against us is that our mortgage overall is small ($140k) given the LCOL area.  So payments are already pretty low.  Going from 3.7% to 3.2% saves < $40/mo.  Not sure what our re-financing costs would be but given the fees on our origional morgage I'm guestimating about $2,900.  Which would be a payback period of 6.2 years.

It definitely pays to shop around and play mortgage lenders off each other. Try and find one that will try to skip the appraisal (~$400), and waive some of their fees.

Kem

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Re: DONT Payoff your Mortgage Club
« Reply #2073 on: March 03, 2020, 09:40:59 AM »
I wonder how our attitudes might change if we instead had no ownership but merely paid rent (albeit at much lower levels) to inhabit a property, with decadal time-frames.

Some of those mid 1920 NYC apartment dwellers found out --- they simply never moved --- and their landlords let the properties rot around them.

...

Out of kicks and giggles I just gave Credible a shot.

Currently I have 79.2% LTV, so a fresh cash-out 8-9 months after the last refi isnt going to happen.  I am a couple months over the last refi break even & pay 935.77 P&I & 344.76 escrow at 3.875%.

For $796 out of pocket I can drop to 3.375 for $873 P&I and this is on a sliding scale all the way down to $4,438 out of pocket at 2.875% for $820 P&I.

At the low end Id save 63/month, so the break even (ignoring future value of out-of-pocket) is 13 months.

At the high end Id save $114/month, with a break even of 39 months.  Meh.
« Last Edit: March 03, 2020, 10:05:34 AM by Kem »

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #2074 on: March 03, 2020, 11:09:41 AM »
I wonder how our attitudes might change if we instead had no ownership but merely paid rent (albeit at much lower levels) to inhabit a property, with decadal time-frames.

Some of those mid 1920 NYC apartment dwellers found out --- they simply never moved --- and their landlords let the properties rot around them.
Not what I meant.  The landlords still owned the property.
It's meant to be a thought exercise, nothing more...

dandarc

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Re: DONT Payoff your Mortgage Club
« Reply #2075 on: March 03, 2020, 11:46:10 AM »
I wonder how our attitudes might change if we instead had no ownership but merely paid rent (albeit at much lower levels) to inhabit a property, with decadal time-frames.
The Disney Vacation Club actually works that way. Timeshare, so not so much "at much lower levels", but if you read the contract, it is actually a ~50 year lease. But "renting on a very long term to inhabit a property" is exactly what "owners" are doing in that program. So I guess this idea works at a very small, niche scale at least.

achvfi

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Re: DONT Payoff your Mortgage Club
« Reply #2076 on: March 04, 2020, 12:30:04 PM »
It turns out best mortgage rates i have seen so far are 3.25% for cash-out refi vs 3% for just refi for 30 year fixed. Still a good rate.
It improves cash-flow by $200/m and 55K cash out.

I tried and failed to convince DW that cash-out refi was a good idea. So we are moving forward with 30 year fixed refinance instead.

Just locked in 2.875% for 30 year fixed refi - a reference interest rate if you are in same boat. Good luck!

Our mortgage payment will be down by 40%. Now I have a good problem of how to automate this freed up cash-flow to investments.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2077 on: March 04, 2020, 12:58:54 PM »
That. Is a fantastic rate. Takes my breath away. A full $300/month less than what I would pay.

What state do you live in? perhaps that rate is not available to every state.

achvfi

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Re: DONT Payoff your Mortgage Club
« Reply #2078 on: March 04, 2020, 01:52:16 PM »
That. Is a fantastic rate. Takes my breath away. A full $300/month less than what I would pay.

What state do you live in? perhaps that rate is not available to every state.
It probably does depend on the state.

Here is my advice if you are looking for good rates. Skip big banks and big mortgage lenders like quicken. Go for smaller regional mortgage lending companies and credit unions.

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Re: DONT Payoff your Mortgage Club
« Reply #2079 on: March 04, 2020, 02:36:51 PM »
We just locked in 3.25% for a 30 year fixed refinance yesterday. Down from 4%. We don't have a large mortgage but still saves us $110/month. Closing cost is only $700. Used a local broker that was highly recommended by multiple people. Thought about cash out refi but our goal was to lower our monthly payment. We also plan to move in about 8 years.

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Re: DONT Payoff your Mortgage Club
« Reply #2080 on: March 04, 2020, 02:49:03 PM »
We just locked in 3.25% for a 30 year fixed refinance yesterday. Down from 4%. We don't have a large mortgage but still saves us $110/month. Closing cost is only $700. Used a local broker that was highly recommended by multiple people. Thought about cash out refi but our goal was to lower our monthly payment. We also plan to move in about 8 years.

Dayam!  That's a sweet rate. 

kenmoremmm

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Re: DONT Payoff your Mortgage Club
« Reply #2081 on: March 04, 2020, 02:52:10 PM »
i'm surprised rates aren't lower.

i locked in 3.375% for 30 years in jan 2015. i think 10-year rate was at 1.68 or somewhere thereabouts.

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Re: DONT Payoff your Mortgage Club
« Reply #2082 on: March 04, 2020, 03:18:22 PM »
i'm surprised rates aren't lower.

i locked in 3.375% for 30 years in jan 2015. i think 10-year rate was at 1.68 or somewhere thereabouts.

As I said, mortgage rates take a notoriously long time to drop relative to bonds. The lag can be several months. When bonds go up, though, they follow in near lockstep.

MasterStache

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Re: DONT Payoff your Mortgage Club
« Reply #2083 on: March 04, 2020, 04:48:48 PM »
i'm surprised rates aren't lower.

i locked in 3.375% for 30 years in jan 2015. i think 10-year rate was at 1.68 or somewhere thereabouts.

I did get a couple quotes at 3% but closing cost were north of 2.5K. After doing the math it made more sense to take the 3.25% and only pay $700 in closing cost. 

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #2084 on: March 04, 2020, 06:30:16 PM »
https://www.washingtonpost.com/business/2020/03/03/economy-coronavirus-rate-cuts/

Wow.  Half a percent!!!   I can't wait to see what that does for mortgage rates.

Which brings me to a dilemma.  I'm getting my kitchen redone, so I could refinance not only the mortgage principle but also the renovation costs.  I had planned to pay cash, but...a refi would let me sink that cash into the market instead, probably during/just after a correction.  Should I do it???  My mortgage is currently 3.875% for an amount that's ~35-40% of my home value (I'd been paying it down aggressively).
I would totally do it. Just don't let the scope of the kitchen reno creep with all that new money!
« Last Edit: March 05, 2020, 06:01:25 AM by Dicey »

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Re: DONT Payoff your Mortgage Club
« Reply #2085 on: March 05, 2020, 05:28:29 AM »
So the question is when to start the refi process?  I can drop about 3/4 of a percent depending. Im thinking of waiting at least a week, but should it be 2or three weeks at this point.

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Re: DONT Payoff your Mortgage Club
« Reply #2086 on: March 05, 2020, 05:57:40 AM »
So the question is when to start the refi process?  I can drop about 3/4 of a percent depending. Im thinking of waiting at least a week, but should it be 2or three weeks at this point.

There is always risk in waiting. I'm not sure anyone can give you a definitive answer.

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Re: DONT Payoff your Mortgage Club
« Reply #2087 on: March 05, 2020, 06:06:28 AM »
So the question is when to start the refi process?  I can drop about 3/4 of a percent depending. Im thinking of waiting at least a week, but should it be 2or three weeks at this point.

There is always risk in waiting. I'm not sure anyone can give you a definitive answer.

Yup, it's a crap shoot.  Continued global concern in the markets can push investors to US Treasuries and hold them at historic lows (i.e.. ~1% for 10y). Or the picture can brighten just oh-so-little with the fed's rate cut and some slowing disease transmission rates and we may have already hit bottom here.  It's impossible to know for certain.

My take?  If the math is in your favor to refinance now, do it.  You'll lock in a rate that's in the low 3.x%s - which is historically low.  Maybe you'll miss out on another 0.1-0.3% further drop, but maybe not.  The only reason I'm waiting is that my rate drop would be ~0.35% and with closing costs my ROI would be uncomfortably close to how long we plan on staying in this house (4-5 years).

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Re: DONT Payoff your Mortgage Club
« Reply #2088 on: March 05, 2020, 07:18:00 AM »
Seeing 2.8% for a 15 year refi in my neck of the woods. May pull the trigger if it gets closer to 2.5%.

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Re: DONT Payoff your Mortgage Club
« Reply #2089 on: March 05, 2020, 07:43:43 AM »
It turns out best mortgage rates i have seen so far are 3.25% for cash-out refi vs 3% for just refi for 30 year fixed. Still a good rate.
It improves cash-flow by $200/m and 55K cash out.

I tried and failed to convince DW that cash-out refi was a good idea. So we are moving forward with 30 year fixed refinance instead.

Just locked in 2.875% for 30 year fixed refi - a reference interest rate if you are in same boat. Good luck!

Our mortgage payment will be down by 40%. Now I have a good problem of how to automate this freed up cash-flow to investments.

Please post the following information when referencing a particular refi deal:

Term
Interest rate
Closing costs <-------
State/location <---------
Cashout or not

achvfi

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Re: DONT Payoff your Mortgage Club
« Reply #2090 on: March 05, 2020, 09:36:56 AM »

Please post the following information when referencing a particular refi deal:

Term
Interest rate
Closing costs <-------
State/location <---------
Cashout or not

Type ---> Refinance
Term ---> 30 year fixed
Interest rate ---> 2.875 locked
Closing costs ---> 300 appraisal + ~$1000 Title + ~$300 Misc fees - Potential Lender credits $700 
                          + refundable lock fee + fund escrow for next year
State/location ---> Midwest
Cashout? ---> no

BlueHouse

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Re: DONT Payoff your Mortgage Club
« Reply #2091 on: March 05, 2020, 11:52:21 AM »
I wonder how our attitudes might change if we instead had no ownership but merely paid rent (albeit at much lower levels) to inhabit a property, with decadal time-frames.
The Disney Vacation Club actually works that way. Timeshare, so not so much "at much lower levels", but if you read the contract, it is actually a ~50 year lease. But "renting on a very long term to inhabit a property" is exactly what "owners" are doing in that program. So I guess this idea works at a very small, niche scale at least.
Leaseholds seem to work in the UK. 

TomTX

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Re: DONT Payoff your Mortgage Club
« Reply #2092 on: March 05, 2020, 05:06:51 PM »

Please post the following information when referencing a particular refi deal:

Term
Interest rate
Closing costs <-------
State/location <---------
Cashout or not

Type ---> Refinance
Term ---> 30 year fixed
Interest rate ---> 2.875 locked
Closing costs ---> 300 appraisal + ~$1000 Title + ~$300 Misc fees - Potential Lender credits $700 
                          + refundable lock fee + fund escrow for next year
State/location ---> Midwest
Cashout? ---> no

Thanks! Sounds like a great deal.

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Re: DONT Payoff your Mortgage Club
« Reply #2093 on: March 05, 2020, 09:09:28 PM »
Man, these awesome looking rates and the drop in the stock market have me thinking of refinancing.  I'm just not sure that it makes sense in my case, considering I'm already at a 3.5% rate.  I don't want my monthly payment to go up much, so I'd be able to take out $30-35k (to invest) and extend my mortgage ~7.5yrs by starting a new 30yr.  I'm sure I'd come out ahead, but I'm also considering RE in ~2yrs.  At that point, I don't even know if I'll stay in this house when I'm not tied down to a job.  I might buy an RV or van and travel for a while or re-locate to a nicer area.  If there were no closing costs, I'd definitely jump on it.  But it just seems like it'd take too long to break-even going from 3.5% to 3ish%.  Maybe I'll wait and see if they drop even further.

WWB42D (What would boarder42 do)?  I'm sure he's already working on his own cash-out refinance :)

Vapour

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Re: DONT Payoff your Mortgage Club
« Reply #2094 on: March 05, 2020, 09:12:16 PM »

Please post the following information when referencing a particular refi deal:

Term
Interest rate
Closing costs <-------
State/location <---------
Cashout or not

Type ---> Refinance
Term ---> 30 year fixed
Interest rate ---> 2.875 locked
Closing costs ---> 300 appraisal + ~$1000 Title + ~$300 Misc fees - Potential Lender credits $700 
                          + refundable lock fee + fund escrow for next year
State/location ---> Midwest
Cashout? ---> no
Would you mind sharing who your lender is?  I'm also in the midwest and this seems like an awesome deal with a really good rate and low closing costs.  I've done just a little searching online and I'm not finding anything quite this good.  Congrats to you!

Telecaster

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Re: DONT Payoff your Mortgage Club
« Reply #2095 on: March 05, 2020, 09:22:35 PM »
Leaseholds seem to work in the UK.

Here too, but lenders won't touch them unless the leasehold expires after the loan term. 

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #2096 on: March 06, 2020, 05:04:03 AM »
Found this on another thread. Thanks, @Duke03.


https://www.rbfcu.org/rates

Click on the promo Refinance.... you can get an 11 year for 2.45%.... FYI closing cost will be about $1100 as long as you have at least 10% equity.... You're Welcome!!


Thank you. this is a great rate.

I don't seem to be able to join online as they won't even accept my zip code (in CT) as a valid one.
I'll make a call tomorrow and see what they say.

Call them they can do a mortgage any where.  They are the largest credit union in Texas and are awesome to deal with.  I've had 3 mortgages with them no issues at all.

achvfi

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Re: DONT Payoff your Mortgage Club
« Reply #2097 on: March 06, 2020, 08:38:47 AM »

Please post the following information when referencing a particular refi deal:

Term
Interest rate
Closing costs <-------
State/location <---------
Cashout or not

Type ---> Refinance
Term ---> 30 year fixed
Interest rate ---> 2.875 locked
Closing costs ---> 300 appraisal + ~$1000 Title + ~$300 Misc fees - Potential Lender credits $700 
                          + refundable lock fee + fund escrow for next year
State/location ---> Midwest
Cashout? ---> no
Would you mind sharing who your lender is?  I'm also in the midwest and this seems like an awesome deal with a really good rate and low closing costs.  I've done just a little searching online and I'm not finding anything quite this good.  Congrats to you!

Sorry, I went with small regional player, very close to home. I want to keep it private. Luckily was able to lock in when interest rates hit 2.875 30 year fixed very briefly. Now they are back in range between 3% - 3.25%. Seems like they can change multiple times in a day.

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #2098 on: March 06, 2020, 09:26:47 AM »

Please post the following information when referencing a particular refi deal:

Term
Interest rate
Closing costs <-------
State/location <---------
Cashout or not

Type ---> Refinance
Term ---> 30 year fixed
Interest rate ---> 2.875 locked
Closing costs ---> 300 appraisal + ~$1000 Title + ~$300 Misc fees - Potential Lender credits $700 
                          + refundable lock fee + fund escrow for next year
State/location ---> Midwest
Cashout? ---> no
Would you mind sharing who your lender is?  I'm also in the midwest and this seems like an awesome deal with a really good rate and low closing costs.  I've done just a little searching online and I'm not finding anything quite this good.  Congrats to you!

Sorry, I went with small regional player, very close to home. I want to keep it private. Luckily was able to lock in when interest rates hit 2.875 30 year fixed very briefly. Now they are back in range between 3% - 3.25%. Seems like they can change multiple times in a day.

I wend with a small regional player with a branch a mile from my home.
What happened?  Before I made the *first payment* they sold my loan to another bank, who sold it to a third player.  Now I'm with some company in California (opposite coast).  Go figure.

Don't assume that just because you go with a local bank it will stay that way. 

Vapour

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Re: DONT Payoff your Mortgage Club
« Reply #2099 on: March 06, 2020, 12:15:06 PM »

Please post the following information when referencing a particular refi deal:

Term
Interest rate
Closing costs <-------
State/location <---------
Cashout or not

Type ---> Refinance
Term ---> 30 year fixed
Interest rate ---> 2.875 locked
Closing costs ---> 300 appraisal + ~$1000 Title + ~$300 Misc fees - Potential Lender credits $700 
                          + refundable lock fee + fund escrow for next year
State/location ---> Midwest
Cashout? ---> no
Would you mind sharing who your lender is?  I'm also in the midwest and this seems like an awesome deal with a really good rate and low closing costs.  I've done just a little searching online and I'm not finding anything quite this good.  Congrats to you!

Sorry, I went with small regional player, very close to home. I want to keep it private. Luckily was able to lock in when interest rates hit 2.875 30 year fixed very briefly. Now they are back in range between 3% - 3.25%. Seems like they can change multiple times in a day.
Totally understand.  Great job on securing such a low rate.  I guess mortgage rates are just as volatile as the market these days.