Author Topic: DONT Payoff your Mortgage Club  (Read 538961 times)

habanero

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Re: DONT Payoff your Mortgage Club
« Reply #2250 on: June 03, 2020, 01:15:38 PM »
Got the paperwork from the bank today and signed it and returned it so guess it's all sorted out then. Was quite shocked they actually did this by paper but guess there is some legal stuff requiring them to do it by snail mail and not on-line secure signing. Well, whatever.

This will reduce my monthly mortage bill from around 1300 dollars / month (some of it tax deductible) to a whopping 285 dollars (same amount tax deductible as before). So after tax I pay all of 220 dollars on my mortgage while inflation chews away at the principal. Sweet.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2251 on: June 03, 2020, 02:30:57 PM »
@habaneroNorway you are the LeBron James of the DNPYM club!

habanero

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Re: DONT Payoff your Mortgage Club
« Reply #2252 on: June 03, 2020, 03:05:01 PM »
The mortgage system here is very different from the US - adjustable-rate mortgages are the standard and you have to actively opt for a fixed rate and very few people do and if you do its generally fixed for a maximum of 10 years (mostly due to the interest rate market, there isn't much trading beyond 10 years). The rules are that if a bank announces a change in the interest rate it's effective 6 weeks from giving notice. One of the plus points of floating rate mortgages is you can prepay or increase pretty much any way you like with no fees as there the rate is never out of sync with the prevailing market. The downside is that it fluctuates and you dont have any protection if rates start increasing. They haven't done so in any meaningful way for ages so staying floating has worked out fine. Normally you need a pretty low loan-to-value-ratio to apply for an interest-only mortgage, but this regulation is temporarily suspended to help people who are out of work due to Covid-19-regulations. I have applied under the regular rules as my mortgage is not that high anyway so I would have been granted it in any case.

I could increase my mortgage but to quote the great philosopher Warren Buffet "why risk something I don't want for something I don't need" or how he put it. I've never been a fan of leveraged investing and have no intention of starting doing it now. If you nitpick you can say not repaying the mortgage is sort of the same as leveraged investing, but it isn't really as it will never put you in a situation where your bank/broker forces you to liquidate. I view it as a stupid low cost of housing at current rate levels, the debt is easily manegable and inflation will erode the real debt burden given time.

While the refinancing option is a sweet feature of US mortgages as it can be viewed as a one-way bet (refinance if rates drop a lot, do nothing if they increase) it comes as a price. If you had a 30y mortgage in the US with no refinancing option the rate would be approximately 0.50% lower than with refinancing option.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2253 on: June 04, 2020, 05:40:05 AM »
I hate to offer this thought in this forum, but the true protection in an adjustable rate situation is...having a lower loan balance.

habanero

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Re: DONT Payoff your Mortgage Club
« Reply #2254 on: June 04, 2020, 05:48:21 AM »
I hate to offer this thought in this forum, but the true protection in an adjustable rate situation is...having a lower loan balance.

See your point, but for me the notional is at a size where it is easily managable and part of the extra interest cost in case of a rate hike will be offset by higher deposit rates on my cash position anyway. And you have the vaguer point that low rates generally mean the ecoonomy is doing worse so there is an element of a natural hedge in there, but I'd be the first to admit that's pushing a point quite far.

Currently I can get FDIC-insured deposit rates higher than my mortgage rate so that point alone makes it pointless to pay down the balance, but that's not a normal situation and it might not last for very long.

And as we all know, if SHTF in your personal life liquidity is a lot more useful than a bit lower mortgage balance.

K-ice

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Re: DONT Payoff your Mortgage Club
« Reply #2255 on: June 04, 2020, 11:27:03 PM »
I hate to offer this thought in this forum, but the true protection in an adjustable rate situation is...having a lower loan balance.

Or being able to refinance for a longer period of time. I am in Canada and most people lock in their mortgage rate for 5 years while they pay it off over 25 years.  I too was concerned about a rate jump at renewal time. But worst case, your 20y mortgage becomes a 25y mortgage again. You could keep your mortgage forever.... 

habanero

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Re: DONT Payoff your Mortgage Club
« Reply #2256 on: June 05, 2020, 12:50:20 AM »
Yes, but if it's an interest-only then extending it doesnt really do much to the monthly payments anyway as there are no balance payments. Otherwise it's much the same here - standard mortgage is 25 or 30 years, but rate locks generally only available up to 10 years and most take much shorter lock which I personally don't really see the point in.

Im not denying I have more exposure to rates going up but I 1) see no plausible way that would happen anytime some and 2) if so happens I wont have a problem with it and it won't really affect my net interest cost anyway as floating deposit rates will go up as well. So in that sense I'm fairly neutral on the actual level of mortgage rates. The other side of the balance sheet, my cash position offers me ample liquidity, a safety net, reduces portfolio volatility, provides positive carry vs my mortgage at mom. The purpose of my mortgage balance at mom is to be devoured by inflation.

On another note - there is a very high probability wage growth will be very low for some time so real wages might well go down so to what extent the actual burden get smaller when rates get very low is also open for debate.

iOlly

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Re: DONT Payoff your Mortgage Club
« Reply #2257 on: June 13, 2020, 12:11:31 AM »
I hate to offer this thought in this forum, but the true protection in an adjustable rate situation is...having a lower loan balance.
That is my plan, we’re on 5-year fixed deals. Due to sort another next year. Not over-paying. When the remaining mortgage balance is less significant, we’ll go to an adjustable rate (called a Tracker in the UK) and just let it run. For now, I take a lot of comfort in knowing what I am on the hook for each month.

Should caveat the above by saying we built our forever home, and have no plans to move, ever.

FIreDrill

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Re: DONT Payoff your Mortgage Club
« Reply #2258 on: June 13, 2020, 11:26:45 AM »
Working on another refinance now.  Locked in at 2.85% 30yr with 0 points and about 2700 closing plus escrow.  Appraisal was waived as well.  Comes out to a 8 month break even after running all the numbers.

Current rate - 3.5%
New rate - 2.85%
State - Washington
Loan amount - 590k
Term - 30yr Conventional
Closing costs - 2700 (not including escrow)

Seems too good to be true but we will see....


habanero

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Re: DONT Payoff your Mortgage Club
« Reply #2259 on: June 13, 2020, 01:02:05 PM »
what are the 2700 bucks in closing costs?

solon

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Re: DONT Payoff your Mortgage Club
« Reply #2260 on: June 13, 2020, 05:33:39 PM »
Wish  I could find a deal like that. I've tried several times in the last couple months, but no joy.

FIreDrill

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Re: DONT Payoff your Mortgage Club
« Reply #2261 on: June 14, 2020, 12:08:27 AM »
what are the 2700 bucks in closing costs?

Mostly origination fees and title insurance. But the rate they quoted me had a decent amount of point pay down that they waived.  I got all the initial paperwork and everything looks legit but time will tell.  If they try to bait and switch me I'll just walk away.  I have not seen anything near this rate for my area and refinance amount so I'm hoping it works out.

FIreDrill

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Re: DONT Payoff your Mortgage Club
« Reply #2262 on: July 01, 2020, 04:17:01 PM »
So with rates dropping I shopped around some more and got another competing offer for the following.

596k
30yr
2.75%
0 points
0 lender fees
Appraisal waiver
566 lender credit towards escrow.
Washington state

So essentially they will pay me 566 to refinance from 3.5% to 2.75%. I told them I am shopping around but we locked the rate.  I'll be taking this offer to the other lender and asking them to beat it and the new lender was totally fine knowing I was using them as a bargaining chip.

It's getting crazy out there....

Telecaster

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Re: DONT Payoff your Mortgage Club
« Reply #2263 on: July 01, 2020, 06:01:30 PM »
Woah, who is your lender?  I live in WA and I'm not seeing rates like that.  But I don't owe a lot, so perhaps that makes my loan less attractive.

FIreDrill

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Re: DONT Payoff your Mortgage Club
« Reply #2264 on: July 01, 2020, 07:03:37 PM »
Woah, who is your lender?  I live in WA and I'm not seeing rates like that.  But I don't owe a lot, so perhaps that makes my loan less attractive.

I'm not seeing rates like this on bankrate for my balance either but if you find the right lender or two it seems you can get some crazy good offers and some competition going.

The first lender is Caliber and the second is LoanDepot.

So far LoanDepot has been a better customer experience so I may just go with them if Caliber gives me any issues.

kenmoremmm

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Re: DONT Payoff your Mortgage Club
« Reply #2265 on: July 02, 2020, 12:21:58 AM »
wow, crazy that caliber came in so low. we had checked with them 6 years ago and they were easily 3/8 to 1/2 point higher than most big name banks.

dragoncar

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Re: DONT Payoff your Mortgage Club
« Reply #2266 on: July 02, 2020, 01:32:40 AM »
Woah, who is your lender?  I live in WA and I'm not seeing rates like that.  But I don't owe a lot, so perhaps that makes my loan less attractive.

I'm not seeing rates like this on bankrate for my balance either but if you find the right lender or two it seems you can get some crazy good offers and some competition going.

The first lender is Caliber and the second is LoanDepot.

So far LoanDepot has been a better customer experience so I may just go with them if Caliber gives me any issues.

Just finished a refinance and discovered a boglehead thread too late (https://www.bogleheads.org/forum/viewtopic.php?f=2&t=289559)

You don't need to start at the beginning. Lots of good info on current rates and deals.  With the knowledge there I think I could have gotten a few basis points lower. 

TomTX

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Re: DONT Payoff your Mortgage Club
« Reply #2267 on: July 05, 2020, 08:47:46 AM »
Just emailed my credit union requesting they adjust my mortgage to current rates. Let's see what they do!

Unfortunately in Texas, I can't refi again until around Thanksgiving.

dragoncar

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Re: DONT Payoff your Mortgage Club
« Reply #2268 on: July 05, 2020, 08:54:22 PM »
Just emailed my credit union requesting they adjust my mortgage to current rates. Let's see what they do!

Unfortunately in Texas, I can't refi again until around Thanksgiving.

That's one of those things that should totally work but probably won't. 

DadJokes

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Re: DONT Payoff your Mortgage Club
« Reply #2269 on: July 07, 2020, 10:40:25 AM »
I just want to make sure I'm not missing something obvious:

I would like to pay off the mortgage before I stop working. The cash flow difference of not having a mortgage payment reduces risk more than having that extra money in the market when I actually stop working (but not a day prior). The reduced expenses should also make college financial aid & ACA subsidies easier to acquire. The common advice seems to be to take a lump sum out of a taxable brokerage and pay it off in one fell swoop.

However, our household income is not high enough that we are maxing out all tax-advantaged retirement accounts. We are currently filling ~$49,000 out of $77,600 available space. As such, we would have to reduce investing in a combination of 401(k)s & Roth IRAs by about $11k/yr to have enough in a taxable brokerage by the time we are FI to pay off the remaining mortgage at that time (12 years, $220k FV, 8% gains).

Alternatively, we could continue as we are, and once we are 2-3 years from FI, stop all retirement investing and put everything toward the mortgage. We would probably still invest enough to keep taxes reasonable, extending our timeline by a year or so, but that's it. Since my wife (currently) likes her job, she may continue working for a couple years anyway, which would allow for more maneuvering.

What are everyone's thoughts on these two options, and is there another option I'm missing?
« Last Edit: July 07, 2020, 10:43:27 AM by DadJokes »

FIreDrill

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Re: DONT Payoff your Mortgage Club
« Reply #2270 on: July 07, 2020, 10:54:11 AM »
I just want to make sure I'm not missing something obvious:

I would like to pay off the mortgage before I stop working. The cash flow difference of not having a mortgage payment reduces risk more than having that extra money in the market when I actually stop working (but not a day prior). The reduced expenses should also make college financial aid & ACA subsidies easier to acquire. The common advice seems to be to take a lump sum out of a taxable brokerage and pay it off in one fell swoop.

However, our household income is not high enough that we are maxing out all tax-advantaged retirement accounts. We are currently filling ~$49,000 out of $77,600 available space. As such, we would have to reduce investing in a combination of 401(k)s & Roth IRAs by about $11k/yr to have enough in a taxable brokerage by the time we are FI to pay off the remaining mortgage at that time (12 years, $220k FV, 8% gains).

Alternatively, we could continue as we are, and once we are 2-3 years from FI, stop all retirement investing and put everything toward the mortgage. We would probably still invest enough to keep taxes reasonable, extending our timeline by a year or so, but that's it. Since my wife (currently) likes her job, she may continue working for a couple years anyway, which would allow for more maneuvering.

What are everyone's thoughts on these two options, and is there another option I'm missing?

How old will you be at retirement?   My first thought is to treat the Roth's as your payoff fund and max those out then you can withdraw any contributions tax free upon reaching FI and if you are at retirement age you can take all out without tax.

I would probably use the Roth but only withdraw it to pay the monthly mortgage and keep as much invested as possible assuming a low mortgage rate.  You may be able to pay the mortgage via Roth contributions for several years and then be able to take earnings tax free to continue paying the mortgage when you are at retirement age, kinda like a bridge so all withdrawals are tax free..  This should keep your taxable income low.

Hopefully that makes sense...


sherr

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Re: DONT Payoff your Mortgage Club
« Reply #2271 on: July 07, 2020, 10:55:03 AM »
What are everyone's thoughts on these two options, and is there another option I'm missing?

Do I read that correctly, that you're still 12 years away from FIRE? That's a long enough timeframe where it makes no sense to me for you to start saving in a taxable account for the eventual mortgage payoff. Do the optimal thing for now and keep on putting the extra money in your 401k.

Who knows, maybe 5 years from now you'll be making enough to max out your tax-advantaged accounts *and* save for the mortgage payoff. The worst case is that you'll pause your tax-advantaged investing for a few years to pay the mortgage off, like you outline, which is not really that bad, but by forgoing the tax-advantaged investing now you'd merely be choosing to lock in the worst case.

Stubblestache

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Re: DONT Payoff your Mortgage Club
« Reply #2272 on: July 07, 2020, 11:07:00 AM »
In the UK, just locked in a 5 year mortgage at under 2%! No way would it make sense to pay that down rather than invest

DadJokes

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Re: DONT Payoff your Mortgage Club
« Reply #2273 on: July 07, 2020, 11:12:44 AM »
What are everyone's thoughts on these two options, and is there another option I'm missing?

Do I read that correctly, that you're still 12 years away from FIRE? That's a long enough timeframe where it makes no sense to me for you to start saving in a taxable account for the eventual mortgage payoff. Do the optimal thing for now and keep on putting the extra money in your 401k.

Who knows, maybe 5 years from now you'll be making enough to max out your tax-advantaged accounts *and* save for the mortgage payoff. The worst case is that you'll pause your tax-advantaged investing for a few years to pay the mortgage off, like you outline, which is not really that bad, but by forgoing the tax-advantaged investing now you'd merely be choosing to lock in the worst case.

That's the option I'm leaning toward. The largest downside with it is that I'll be paying a lot more in taxes under that scenario. Going with the first option increases my tax liability, but all of that extra money that I'm not hiding from the government is taxed at 12%. If I delay to the point where I have to significantly reduce retirement investing in favor of a taxable brokerage, then I'll some of that money will be taxed at 22%.

I don't see a significant pay raise as likely due to the fact that we both work for the government. Pay raises are fairly predictable, and neither of us plan on leaving.

However, 12 years is a long time. We will almost certainly move at least once during that time. Once FI, we may even end up selling the house and not repurchasing. It's also not outside the realm of possibility that I'll get an inheritance in that time that could be used to pay off the mortgage. There are a lot of variables; I'm just a planner who likes to plan out every little detail.

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #2274 on: July 07, 2020, 07:59:41 PM »
I just want to make sure I'm not missing something obvious:

I would like to pay off the mortgage before I stop working. The cash flow difference of not having a mortgage payment reduces risk more than having that extra money in the market when I actually stop working (but not a day prior). The reduced expenses should also make college financial aid & ACA subsidies easier to acquire. The common advice seems to be to take a lump sum out of a taxable brokerage and pay it off in one fell swoop.
I think there's a little secret here. The common advice is that you could pay it off in one fell swoop, but you probably won't. (Shhhh!) Reasons: in 12 years, your income will likely rise, your assets will be earning assets of their own, and your mortgage payment will have stayed the same. It will be a smaller chunk of your budget than it is now. It will most likely not be as much a percentage of your net worth either. So, while you could pay it off, chances are pretty good that you'll like the big investment account way more than you mind your dwindling mortgage balance. Seems crazy and backwards, but it really does happen.

Also, you want as much of your money to be accruing compound interest as long as possible, so @sherr's idea of accelerating pay down at the very end, basically just as you get to FI, is definitely worth further consideration.

sherr

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Re: DONT Payoff your Mortgage Club
« Reply #2275 on: July 08, 2020, 07:09:49 AM »
Also, you want as much of your money to be accruing compound interest as long as possible, so @sherr's idea of accelerating pay down at the very end, basically just as you get to FI, is definitely worth further consideration.

It was not my idea, I was just restating one of the options DadJokes had listed. The fact that he'd be paying an extra 10% tax if he goes full-bore mortgage-payoff at the end is significant, but perhaps a hybrid approach is optimal: start 5 years out or something and contribute enough to tax-advantaged accounts to drop down to the lower tax bracket, and then the rest to the mortgage.

But I agree in general, 12 years is long enough away that there's no point in making detail plans yet. Who knows how inflation, interest rates, income, house moves, and his general financial state will change in that amount of time.

robartsd

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Re: DONT Payoff your Mortgage Club
« Reply #2276 on: July 08, 2020, 11:14:43 AM »
I just want to make sure I'm not missing something obvious:

I would like to pay off the mortgage before I stop working. The cash flow difference of not having a mortgage payment reduces risk more than having that extra money in the market when I actually stop working (but not a day prior). The reduced expenses should also make college financial aid & ACA subsidies easier to acquire. The common advice seems to be to take a lump sum out of a taxable brokerage and pay it off in one fell swoop.

However, our household income is not high enough that we are maxing out all tax-advantaged retirement accounts. We are currently filling ~$49,000 out of $77,600 available space. As such, we would have to reduce investing in a combination of 401(k)s & Roth IRAs by about $11k/yr to have enough in a taxable brokerage by the time we are FI to pay off the remaining mortgage at that time (12 years, $220k FV, 8% gains).

Alternatively, we could continue as we are, and once we are 2-3 years from FI, stop all retirement investing and put everything toward the mortgage. We would probably still invest enough to keep taxes reasonable, extending our timeline by a year or so, but that's it. Since my wife (currently) likes her job, she may continue working for a couple years anyway, which would allow for more maneuvering.

What are everyone's thoughts on these two options, and is there another option I'm missing?
Another way to improve cash flow when you reach FIRE is to refinance to a new 30 year mortgage just before you stop working (assuming rates are favorable at the time). Get your payments as low as you can then pay as scheduled until you have a tax efficient way to pay off the balance. Could always hold extra bonds roughly equivalent to the mortgage in your tax advantaged accounts to provide a similar sequence of returns mitigation as paying off the mortgage would provide. Not quite as effective at reducing realized income during retirement, but nearly as effective at reducing sequence of returns risk.

You say you are both government workers. Do you not expect to have healthcare benefits as part of your government retirement package? If so, ACA concerns may not be applicable to your situation. Yes, if you need to realize income from tax deferred accounts in order to make your mortgage payments, this could have an influence on the availability of financial aid.

TomTX

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Re: DONT Payoff your Mortgage Club
« Reply #2277 on: July 12, 2020, 09:09:45 AM »
Just emailed my credit union requesting they adjust my mortgage to current rates. Let's see what they do!

Unfortunately in Texas, I can't refi again until around Thanksgiving.

That's one of those things that should totally work but probably won't.
It didn't. They won't modify until the 12 month refi restriction from the state is gone.

Fomerly known as something

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Re: DONT Payoff your Mortgage Club
« Reply #2278 on: July 17, 2020, 06:58:22 PM »
I must confess, I might “pay off” my mortgage next year. I’m considering moving to San Francisco next year for about 4 years.  If I do I will sell my house (no cost to me with a work relocation package).  I’ll rent in SF because I don’t see myself living there long term but it sounds fun for the short turn.  What’s worse than not paying off your mortgage renting am I right?

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2279 on: July 18, 2020, 01:49:40 PM »
I suppose it all depends on how firm that 4-year time table is, right? If 4 could become seven, you have a different best course than if 4 could become nine months.

Fomerly known as something

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Re: DONT Payoff your Mortgage Club
« Reply #2280 on: July 18, 2020, 03:49:37 PM »
I suppose it all depends on how firm that 4-year time table is, right? If 4 could become seven, you have a different best course than if 4 could become nine months.

The 4 is pretty firm.  I’ll be eligible to retire with a federal pension at the end of 4.  There is no reason for me to stay longer. 

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #2281 on: July 19, 2020, 09:28:04 AM »
I must confess, I might “pay off” my mortgage next year. I’m considering moving to San Francisco next year for about 4 years.  If I do I will sell my house (no cost to me with a work relocation package).  I’ll rent in SF because I don’t see myself living there long term but it sounds fun for the short turn.  What’s worse than not paying off your mortgage renting am I right?
If you're going to sell it, why sink the cash into paying off the mortgage? Or do you mean that selling the property will "pay off" the mortgage?

BTW, just read that rents are down over 10% in SF and parts of Silly Valley, as workers figure out they can get more space for less elsewhere. With no commute, they're finding that more space is needed when working from home. While that stat may not be completely accurate, it could mean that finding a place to live in The City may become slightly easier, if not cheaper.

Fomerly known as something

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Re: DONT Payoff your Mortgage Club
« Reply #2282 on: July 19, 2020, 01:17:02 PM »
I must confess, I might “pay off” my mortgage next year. I’m considering moving to San Francisco next year for about 4 years.  If I do I will sell my house (no cost to me with a work relocation package).  I’ll rent in SF because I don’t see myself living there long term but it sounds fun for the short turn.  What’s worse than not paying off your mortgage renting am I right?
If you're going to sell it, why sink the cash into paying off the mortgage? Or do you mean that selling the property will "pay off" the mortgage?

BTW, just read that rents are down over 10% in SF and parts of Silly Valley, as workers figure out they can get more space for less elsewhere. With no commute, they're finding that more space is needed when working from home. While that stat may not be completely accurate, it could mean that finding a place to live in The City may become slightly easier, if not cheaper.

Dicey sell the house and pay it off.  I don’t like the house enough to want to return to it after 4 years and it does not make sense as a rental.  Likely with rents going down I may consider a 2 bedroom to rent now.  I’m waiting at least one transfer cycle to se if I still like the idea of such a move.  It is kind of drastic and since I don’t need to do it I should think on it for more than 2 weeks.  If by some miracle the spot is no longer open no harm.

Tig_

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Re: DONT Payoff your Mortgage Club
« Reply #2283 on: July 21, 2020, 02:11:27 PM »
Hey all, just curious, whats your thinking on trying to get to 20% equity during a refinance? I think I read some stuff up thread that this might be a more complicated issue than simply asking the question.  I put down 10% and am going to look in to refinancing later this week/next week (on vacation currently).  I'd rather keep the extra cash in case of major furloughs and invest it later if I get lucky....
30yr fixed, FHA, 4.375%, MIP = $37.38
Original Loan: $160,200; Outstanding Balance: ~$154,200
Not using all tax-advantaged space.
My guess is that you would say not to bother, but didn't really get a clear sense up thread on where you all stood on the 20% thing...

sherr

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Re: DONT Payoff your Mortgage Club
« Reply #2284 on: July 21, 2020, 02:29:48 PM »
Putting 20% down on a mortgage will:
1) potentially qualify you for a lower interest rate
2) mean that you don't have to pay PMI / MIP
3) mean that your monthly payment is lower, because you only have 80% of the cost of the house to pay back over the next 30 years instead of 90%.

3 is probably mostly a wash for people in this forum, however having lower monthly payments can matter if your cash flow is very tight (or if you get furloughed for example).

But 1 and especially 2 can be significant. It changes the math, potentially to the point where the "guaranteed return" of paying off the mortgage can start making sense.

What's best for you specifically depends on your situation and the rate quotes you're getting, as you say you may need the extra money for your furlough emergency fund and you're willing to pay some PMI for the privilege. I'd say though that at least you want to ensure that your new loan allows you to cancel PMI once you reach 80% equity, so that you have the option of paying it down a little in the future to get rid of the PMI payment. And check the specific terms to ensure they don't need a re-appraisal if you're just using the original home value and not using appreciation as part of the 80% equity calculation.
« Last Edit: July 21, 2020, 02:32:27 PM by sherr »

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2285 on: July 22, 2020, 06:14:06 AM »
It sounds like you're worried about a job separation, so I'd go with whatever can get the deal done the fastest.

Tig_

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Re: DONT Payoff your Mortgage Club
« Reply #2286 on: July 22, 2020, 10:10:00 AM »
Thanks for the feedback.  Concern about job separation ebbs and flows.  IF it happens it won't happen for at least 4-5 months, it's pretty unlikely for my position/overall employer, and if it happens I'll be able to tap into 457.  So... it's an overly cautious thing that's in the back of my mind, but more likely that we'll get 5 furlough days at Christmas or something that would be spread over over the year paycheck wise.

But thanks!  Sounds like no real clear answer, but keep my ear to the ground about furloughs and try to get it done asap.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2287 on: July 22, 2020, 11:45:48 AM »
I don't think rates will change quickly. I'd base timing more on your own situation to be able to display your personal data for maximum credit-worthiness.

Tig_

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Re: DONT Payoff your Mortgage Club
« Reply #2288 on: July 22, 2020, 06:12:24 PM »
hmm interesting. good to know.  That was kind of my thought when the big rush happened...

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2289 on: July 23, 2020, 07:15:46 AM »
It seems like refinance rates are higher than purchase rates right now. Is this common?

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #2290 on: July 23, 2020, 08:22:51 AM »
It seems like refinance rates are higher than purchase rates right now. Is this common?
Yup. Just one more thing to consider if/when you're rushing to pay off a mortgage.

K-ice

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Re: DONT Payoff your Mortgage Club
« Reply #2291 on: July 24, 2020, 11:47:26 PM »
It seems like refinance rates are higher than purchase rates right now. Is this common?

One of those frustrating “we will give new clients a better deal than existing clients” situations.

TomTX

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Re: DONT Payoff your Mortgage Club
« Reply #2292 on: July 25, 2020, 06:55:39 AM »
It seems like refinance rates are higher than purchase rates right now. Is this common?

In Texas? Always. Thanks to the nanny state of Texas making refi such a PITA beyond what the Feds require.

dragoncar

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Re: DONT Payoff your Mortgage Club
« Reply #2293 on: July 26, 2020, 12:26:56 AM »
It seems like refinance rates are higher than purchase rates right now. Is this common?

In Texas? Always. Thanks to the nanny state of Texas making refi such a PITA beyond what the Feds require.

Love Texans describing Texas as a "nanny state".   

SwordGuy

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Re: DONT Payoff your Mortgage Club
« Reply #2294 on: July 26, 2020, 07:58:18 AM »
It seems like refinance rates are higher than purchase rates right now. Is this common?

In Texas? Always. Thanks to the nanny state of Texas making refi such a PITA beyond what the Feds require.

Love Texans describing Texas as a "nanny state".

You would think that they would have started to figure out that a whole lot of Texans need a public health nanny, but I guess it will take five or ten or fifty times as many sick and dead Texans before they take the clue.   So much winning.

Mako52

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Re: DONT Payoff your Mortgage Club
« Reply #2295 on: July 27, 2020, 06:56:38 AM »
Question for the DPOYM folks.   P&I of our 30yr mortgage is roughly 20% of our expenses (not including state and Federal taxes, as they fluctuate every year due to variable income).  After mortgage and food expenses, property tax on the home is the biggest expense. If we pay off our mortgage we lock up a large amount of capital but still have a ton of other expenses that don't go away. 

Do you consider how much your mortgage payment is compared to your income when you consider whether to pay it off? 

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #2296 on: July 27, 2020, 07:21:10 AM »
Question for the DPOYM folks.   P&I of our 30yr mortgage is roughly 20% of our expenses (not including state and Federal taxes, as they fluctuate every year due to variable income).  After mortgage and food expenses, property tax on the home is the biggest expense. If we pay off our mortgage we lock up a large amount of capital but still have a ton of other expenses that don't go away. 

Do you consider how much your mortgage payment is compared to your income when you consider whether to pay it off?

In short and in general, paying off a mortgage never makes sense if you have available tax-advantaged space you aren't utilizing (e.g. IRAs, 401(k), HSA).  After that, the longer it takes to pay off your mortgage under an accelerated time-frame the less likely you are to come out ahead paying it off early.

So:  If you are already maxing out your tax-advantaged accounts AND you can pay off your mortgage in just a couple of years, it probably won't be a big difference either way. Such people are already on 'Step 7' of the Investment Order. BUT if it requires not funding your retirement accounts AND/OR it will take 5+ years to complete your accelerated payoff, then it's incredibly unlikely that you will be better off making extra mortgage payments.

Bottom line: money is fungible.  What would extra money payments otherwise go towards? When in doubt, defer to the Investment Order.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2297 on: July 27, 2020, 08:22:13 AM »
It seems like refinance rates are higher than purchase rates right now. Is this common?

In Texas? Always. Thanks to the nanny state of Texas making refi such a PITA beyond what the Feds require.

Love Texans describing Texas as a "nanny state".

You would think that they would have started to figure out that a whole lot of Texans need a public health nanny, but I guess it will take five or ten or fifty times as many sick and dead Texans before they take the clue.   So much winning.

Despite having lived more of my life in Texas than in any other state, none of my four mortgages were obtained there.

RWD

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Re: DONT Payoff your Mortgage Club
« Reply #2298 on: July 29, 2020, 06:28:11 AM »
This weekend... we will be...  *drumroll*  ...making another minimum payment!!

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2299 on: July 29, 2020, 06:31:09 AM »
I sent my payment in as well. Also sent an e-mail to our mortgage broker from October 2019, letting her know that I thought we were ready to refinance. She suggested that coming down 100 basis points might be possible. I will share all the juicy details with this group.