Author Topic: DONT Payoff your Mortgage Club  (Read 540851 times)

TomTX

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Re: DONT Payoff your Mortgage Club
« Reply #2450 on: October 24, 2020, 06:43:35 PM »
Well, Nanny-State Texas won't let me refi more often than once a year anyway.

Frankly, they suck.

Anyway, thanks for the pointers - I'll have a look at the Bogleheads thread and contact LenderFI about no-contact closing, which should be totally doable since e-signatures have been legal for years. I've DocuSigned contracts for close to $1M each at work.
« Last Edit: October 24, 2020, 06:45:51 PM by TomTX »

terrifictim

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Re: DONT Payoff your Mortgage Club
« Reply #2451 on: October 24, 2020, 09:30:39 PM »
I just closed on a refi with LenderFI- 3.0% 30 years no closing costs. No issues with them, electronically signed all the documents leading up to the actual and then a notary came to my house. Took about an hour. They sold my loan to Amerihome. Overall happy with the experience.

rpr

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Re: DONT Payoff your Mortgage Club
« Reply #2452 on: October 25, 2020, 10:09:23 PM »

Good job! We're amassing paperwork to start the re-fi process on all three of our rentals. Three at once has to be easier, right?

This is a good time. Hopefully it all works out for you.

Vapour

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Re: DONT Payoff your Mortgage Club
« Reply #2453 on: October 26, 2020, 07:56:11 PM »
I just closed on a refi with LenderFI- 3.0% 30 years no closing costs. No issues with them, electronically signed all the documents leading up to the actual and then a notary came to my house. Took about an hour. They sold my loan to Amerihome. Overall happy with the experience.

Good to hear!  Glad it went smoothly with them.  How long did it take from lock to close?  Less than 30 days?  Any issues with Amerihome?  My biggest worry is it being a pain to service my new loan.  As long as I can set up automatic payment from my checking account, I'll be happy.  I got out of escrow so at least don't have to worry about them screwing up that!

Today worked out well for me.  I got a call from PenFed this morning.  They were offering a rate of 2.875% for no points/no credit.  Cost ~$1300 with appraisal waived. Basically just title fees and taxes.  Then there's an option of $1150 lender credit for 0.25% higher or 3.125%.  So this basically brings it to no cost (well $150 but not bad).  Looked pretty good to me so I moved forward.  Had to apply on the phone which was annoying.  I didn't see an online option.  At least I'm a member already so that made it easier.  After ~30min on the phone, finally got locked in.  They said it could take 90 days to close!  I can still decide if I want 2.875% with the higher closing cost or 3.125% for basically no closing cost.  The breakeven would be around 4 years just from the interest difference.  Seems like too long to pay an extra $1150 up front for.  I like the no cost option since I'm ahead right away.  I'll have to think about it some more.  I'd come out ahead if I keep it long enough, but not sure that I'm that committed to this house.

So I'm assuming I'm going to go forward with PenFed and thinking about sending something to LenderFI to see if they can lower my 3.25% rate.  When not 30 minutes later, I get an e-mail from them saying my rate is locked at 3.125% at no closing costs!  Sweet!  I guess I wasn't really locked on Friday.  It was pretty late when I talked to them and never did receive any documentation but he told me I was locked.  Oh well.  At least it ended up working to my advantage.  I think I'll go with LenderFI since they can close earlier.  You can't refinance for 6 months after going with them, but they also have a nice deal where if rates drop 0.25% or more after that 6 months, they'll automatically reach out to you to refinance at zero cost.  It sounded like it was an ongoing thing too.  So that's a nice perk.  My lock is set to expire on Nov 20, so we'll see if they can actually meet that date.  If anything goes wrong, PenFed is slow enough that they'll be my backup.

Hope everyone else looking finds some good deals out there too!

PathtoFIRE

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Re: DONT Payoff your Mortgage Club
« Reply #2454 on: October 27, 2020, 11:24:47 AM »
Texas also. We started and then backed out of a refi that would have been an identical rate and terms to what we have now, but reset the 10y ARM block and reduce our monthly payment by 16% at a cost of $7k. Tried LenderFI just now to see, and got no loans being offered; maybe because we are in jumbo territory.

terrifictim

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Re: DONT Payoff your Mortgage Club
« Reply #2455 on: October 27, 2020, 11:49:28 AM »
I just closed on a refi with LenderFI- 3.0% 30 years no closing costs. No issues with them, electronically signed all the documents leading up to the actual and then a notary came to my house. Took about an hour. They sold my loan to Amerihome. Overall happy with the experience.

Good to hear!  Glad it went smoothly with them.  How long did it take from lock to close?  Less than 30 days?  Any issues with Amerihome?  My biggest worry is it being a pain to service my new loan.  As long as I can set up automatic payment from my checking account, I'll be happy.  I got out of escrow so at least don't have to worry about them screwing up that!

Today worked out well for me.  I got a call from PenFed this morning.  They were offering a rate of 2.875% for no points/no credit.  Cost ~$1300 with appraisal waived. Basically just title fees and taxes.  Then there's an option of $1150 lender credit for 0.25% higher or 3.125%.  So this basically brings it to no cost (well $150 but not bad).  Looked pretty good to me so I moved forward.  Had to apply on the phone which was annoying.  I didn't see an online option.  At least I'm a member already so that made it easier.  After ~30min on the phone, finally got locked in.  They said it could take 90 days to close!  I can still decide if I want 2.875% with the higher closing cost or 3.125% for basically no closing cost.  The breakeven would be around 4 years just from the interest difference.  Seems like too long to pay an extra $1150 up front for.  I like the no cost option since I'm ahead right away.  I'll have to think about it some more.  I'd come out ahead if I keep it long enough, but not sure that I'm that committed to this house.

So I'm assuming I'm going to go forward with PenFed and thinking about sending something to LenderFI to see if they can lower my 3.25% rate.  When not 30 minutes later, I get an e-mail from them saying my rate is locked at 3.125% at no closing costs!  Sweet!  I guess I wasn't really locked on Friday.  It was pretty late when I talked to them and never did receive any documentation but he told me I was locked.  Oh well.  At least it ended up working to my advantage.  I think I'll go with LenderFI since they can close earlier.  You can't refinance for 6 months after going with them, but they also have a nice deal where if rates drop 0.25% or more after that 6 months, they'll automatically reach out to you to refinance at zero cost.  It sounded like it was an ongoing thing too.  So that's a nice perk.  My lock is set to expire on Nov 20, so we'll see if they can actually meet that date.  If anything goes wrong, PenFed is slow enough that they'll be my backup.

Hope everyone else looking finds some good deals out there too!

Mine was slightly over 30 days (7/10 locked to 8/24 signed final papers and 8/28 officially closed). Did not do escrow either. Overall happy with the process. No issues so far with Amerihome - they allow free automatic payments from checking account so doesn't appear to be an issue. They also play nicely with Mint and Personal Capital if you're using a financial aggregator.

mtnman125

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Re: DONT Payoff your Mortgage Club
« Reply #2456 on: October 27, 2020, 01:01:22 PM »
Just checking in here- we closed on our new build in June at 3.375, and just locked this morning with LenderFi- 2.5% 30y fixed (no cost). I'm impressed how easy site is to upload documents and broker contact there seems to be great so far.

dandarc

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Re: DONT Payoff your Mortgage Club
« Reply #2457 on: October 27, 2020, 01:27:02 PM »
We just refinanced last October, but this Lender-Fi has me wondering if it isn't time again. Their closing quote is great - has stamp taxes and everything.

Seems like we can go from 3.75% to 3.25%, and cash out $10K after about $2K in closing costs (that 8th of a point that takes it from "pay points" to "lender credit" is the big jump in the list of > $1,000.

I don't think we're quite to where this makes clear and obvious sense - save about $600 / year on the current loan balance, and the expected return less the interest on the additional $10K might be $500.

Maybe if the house appraises higher so we could cash out more it would be a better deal.

Vapour

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Re: DONT Payoff your Mortgage Club
« Reply #2458 on: October 27, 2020, 06:57:39 PM »
Mine was slightly over 30 days (7/10 locked to 8/24 signed final papers and 8/28 officially closed). Did not do escrow either. Overall happy with the process. No issues so far with Amerihome - they allow free automatic payments from checking account so doesn't appear to be an issue. They also play nicely with Mint and Personal Capital if you're using a financial aggregator.
Thanks for sharing!  I have my doubts they can really close by 11/20, but I assume they'll extend the lock if it's their fault.  I uploaded all my docs immediately, so nothing should be held up on my end.  I guess we'll see how things go.  Thanks for the info on Amerihome too.  I don't know if my loan will end up there, but good to know you've had a decent experience with them so far.

Vapour

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Re: DONT Payoff your Mortgage Club
« Reply #2459 on: October 27, 2020, 07:01:59 PM »
We just refinanced last October, but this Lender-Fi has me wondering if it isn't time again. Their closing quote is great - has stamp taxes and everything.

Seems like we can go from 3.75% to 3.25%, and cash out $10K after about $2K in closing costs (that 8th of a point that takes it from "pay points" to "lender credit" is the big jump in the list of > $1,000.

I don't think we're quite to where this makes clear and obvious sense - save about $600 / year on the current loan balance, and the expected return less the interest on the additional $10K might be $500.

Maybe if the house appraises higher so we could cash out more it would be a better deal.
Why are you cashing out $10k?  Seems like that's not really enough to be worth it.  Rates are quite a bit higher on cash outs from what I understand, so unless you're cashing out quite a bit ($50k maybe?), it doesn't seem worth it.  I didn't think LenderFI was doing cash out right now anyway.  That's what I heard and it never came up with any quotes for me when I tried quoting cash out.

If you only have enough equity to cash out $10k, personally I wouldn't bother.  I'd check their regular rates and see what it'd be without the cash out.  I'd guess you can do better than 3.75% with no costs.  If you can get lower than your current rate at no cost, you don't really have anything to lose.  Unless you really do want to cash out or look at refinancing somewhere else in the next 6 months.

dragoncar

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Re: DONT Payoff your Mortgage Club
« Reply #2460 on: October 28, 2020, 12:12:17 AM »
We just refinanced last October, but this Lender-Fi has me wondering if it isn't time again. Their closing quote is great - has stamp taxes and everything.

Seems like we can go from 3.75% to 3.25%, and cash out $10K after about $2K in closing costs (that 8th of a point that takes it from "pay points" to "lender credit" is the big jump in the list of > $1,000.

I don't think we're quite to where this makes clear and obvious sense - save about $600 / year on the current loan balance, and the expected return less the interest on the additional $10K might be $500.

Maybe if the house appraises higher so we could cash out more it would be a better deal.
Why are you cashing out $10k?  Seems like that's not really enough to be worth it.  Rates are quite a bit higher on cash outs from what I understand, so unless you're cashing out quite a bit ($50k maybe?), it doesn't seem worth it.  I didn't think LenderFI was doing cash out right now anyway.  That's what I heard and it never came up with any quotes for me when I tried quoting cash out.

If you only have enough equity to cash out $10k, personally I wouldn't bother.  I'd check their regular rates and see what it'd be without the cash out.  I'd guess you can do better than 3.75% with no costs.  If you can get lower than your current rate at no cost, you don't really have anything to lose.  Unless you really do want to cash out or look at refinancing somewhere else in the next 6 months.

It could be a limited cash out, which doesn't increase the rate.  I did like $10k in "cash out" but it wasn't really cash.  It paid for escrow deposit, insurance prepayments, etc.  So it's more like financing your next property tax payment than a pure cash out.  I already got that money back in cash from my insurance company, though, and will probably get the escrow deposit back as soon as I'm able to cancel escrow.  Or if you already have an escrow account you will get it back from your current lender quickly.

dandarc

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Re: DONT Payoff your Mortgage Club
« Reply #2461 on: October 28, 2020, 10:27:00 AM »
Consistent with this thread's premise - if I'm refinancing, I want as large a loan as they will give me at a low, fixed rate for 30 years (I'd say longer, but that doesn't seem to be available). Right now, that looks like loan balance + about $10K. Suppose I won't know particulars until I try more thoroughly.

I've just been plugging in balance amounts up to 80% LTV into LenderFi - maybe their quote engine lacks the nuance for what I actually want to do.

dandarc

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Re: DONT Payoff your Mortgage Club
« Reply #2462 on: October 28, 2020, 10:34:09 AM »
Ah - if you click "modify search", there is a cash-out option is available. Except it says "no loans avialable - try again". Was just excited to see a better quote tool - the closing costs seem to include filing fees, which are significant here relative to loan size.

Vapour

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Re: DONT Payoff your Mortgage Club
« Reply #2463 on: October 28, 2020, 07:17:36 PM »
We just refinanced last October, but this Lender-Fi has me wondering if it isn't time again. Their closing quote is great - has stamp taxes and everything.

Seems like we can go from 3.75% to 3.25%, and cash out $10K after about $2K in closing costs (that 8th of a point that takes it from "pay points" to "lender credit" is the big jump in the list of > $1,000.

I don't think we're quite to where this makes clear and obvious sense - save about $600 / year on the current loan balance, and the expected return less the interest on the additional $10K might be $500.

Maybe if the house appraises higher so we could cash out more it would be a better deal.
Why are you cashing out $10k?  Seems like that's not really enough to be worth it.  Rates are quite a bit higher on cash outs from what I understand, so unless you're cashing out quite a bit ($50k maybe?), it doesn't seem worth it.  I didn't think LenderFI was doing cash out right now anyway.  That's what I heard and it never came up with any quotes for me when I tried quoting cash out.

If you only have enough equity to cash out $10k, personally I wouldn't bother.  I'd check their regular rates and see what it'd be without the cash out.  I'd guess you can do better than 3.75% with no costs.  If you can get lower than your current rate at no cost, you don't really have anything to lose.  Unless you really do want to cash out or look at refinancing somewhere else in the next 6 months.

It could be a limited cash out, which doesn't increase the rate.  I did like $10k in "cash out" but it wasn't really cash.  It paid for escrow deposit, insurance prepayments, etc.  So it's more like financing your next property tax payment than a pure cash out.  I already got that money back in cash from my insurance company, though, and will probably get the escrow deposit back as soon as I'm able to cancel escrow.  Or if you already have an escrow account you will get it back from your current lender quickly.

Yeah, that would make sense.  Taking a little higher loan balance to cover closing costs and prepaids is pretty common I think.  But it sounded like dandarc actually wants to take extra cash out which I don't think would be allowed via this method while still being considered rate and term.  Could be wrong though.

Vapour

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Re: DONT Payoff your Mortgage Club
« Reply #2464 on: October 28, 2020, 07:25:01 PM »
Consistent with this thread's premise - if I'm refinancing, I want as large a loan as they will give me at a low, fixed rate for 30 years (I'd say longer, but that doesn't seem to be available). Right now, that looks like loan balance + about $10K. Suppose I won't know particulars until I try more thoroughly.

I've just been plugging in balance amounts up to 80% LTV into LenderFi - maybe their quote engine lacks the nuance for what I actually want to do.

Yes, the premise of the thread is to take as big of a mortgage as you can for as long as you can (as long as the interest rate is low which it is right now).  The problem with cash-out refinance is that they add quite a bit to your rate, at least from what I've seen.  It probably makes sense to take out a large sum and invest the difference over time.  But only cashing out $10k and having your entire loan balance subject to the higher interest rate doesn't seem worth it, unless you know you won't keep the loan that long (either moving or hope to refinance again in 6 months).  It does seem like how much you cash out does have some affect on how much rates rise, so it could potentially make sense.

Ah - if you click "modify search", there is a cash-out option is available. Except it says "no loans avialable - try again". Was just excited to see a better quote tool - the closing costs seem to include filing fees, which are significant here relative to loan size.

Yep, that's what I was referring to and why I said I didn't think they weren't doing cash outs.  I agree, the LenderFI tool is nice to get pretty accurate and detailed quotes with closing costs immediately, without giving any info which is great.  I hate the whole, "Call me, apply, let me run your credit" just to see they're not at all competitive.  I found that PenFed now has the same kind of quote tool on their website now too.  I didn't see it when I was looking before, but it's there now. You can go to: https://www.penfed.org/mortgage-center/mortgage-refinancing and click "Get My Rate."  They give the same breakdown of rates and closing costs and again, this is accurate since it's basically what I locked when I talked to someone.  PenFed does quote Cash Out so you can play with that.  You do have to be a PenFed member if you want to go with them but I think it's easy and anyone can join (might need to pay a small fee/donation).  I had some CDs with them years ago so I still had an account.

seeking_north

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Re: DONT Payoff your Mortgage Club
« Reply #2465 on: October 30, 2020, 10:04:43 AM »
From Norway.. here is our plan.

We have $7500 after tax income each month.
We have a $290.000 fixed loan with 2.46% for 20 years (20 years is max fixed loan in Norway)
+ optional 10 years variable or fixed rate at the end.. (not sure until year 20)
We are planning on paying just the interest for the first 10 years, then if the bank allows another 10 years of just paying the interest.
We are investing everything else, which is around $3500 a month

01-10y : $580 pr month
10-20y : $580 or $1500
Year 20: Pay of entirely with invested funds..
20-30y : or refinance, or another fixed loan depending on interest at the time.

How does it sound?
Just paying of the interest for as long as possible, hopefully for 20 years, while inflation works in our favor, while investing as much as possible.


.
« Last Edit: October 30, 2020, 10:21:26 AM by seeking_north »

SwordGuy

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Re: DONT Payoff your Mortgage Club
« Reply #2466 on: October 30, 2020, 10:33:08 AM »
From Norway.. here is our plan.

We have $7500 after tax income each month.
We have a $290.000 fixed loan with 2.46% for 20 years (20 years is max fixed loan in Norway)
+ optional 10 years variable or fixed rate at the end.. (not sure until year 20)
We are planning on paying just the interest for the first 10 years, then if the bank allows another 10 years of just paying the interest.
We are investing everything else, which is around $3500 a month

01-10y : $580 pr month
10-20y : $580 or $1500
Year 20: Pay of entirely with invested funds..
20-30y : or refinance, or another fixed loan depending on interest at the time.

How does it sound?
Just paying of the interest for as long as possible, hopefully for 20 years, while inflation works in our favor, while investing as much as possible.


.

Sit down and do the math if the market drops 40%  and stays that way for a couple of years right when the money is due in year 20.

If it's not disastrous, it's a good plan.  Otherwise, tweak until it's not disastrous.

habanero

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Re: DONT Payoff your Mortgage Club
« Reply #2467 on: November 09, 2020, 07:41:10 AM »
Sit down and do the math if the market drops 40%  and stays that way for a couple of years right when the money is due in year 20.

Then the most obvious action would be to refinance the loan into another 20 or 30 years which is easy over here. As long as you have eligible collateral in form of a home with a value higher than the mortgage it is very hard to envision a scenario in which you have to pay down large amounts if you don't want to. The loan is probably gonna be pretty small compared to the value of the house due to inflation working for 20 years, unless something really bad happens to the housing market of course.

A lot can change between now and then of course, so the strategy is not without risk. The biggest is probably if realationship ends long before year 20 and they have to sell during a bad time in the housing market and are underwater on the mortgage. Mortgage interest is tax-deductible in Norway as well so the after-tax rate of the mortgage is 1.92%.

I would not do it myself. As mentioned earlier I only pay the interest on my mortgange now but 1) my mortgage is small relative to house value and income + I have enough safe assets to pretty much pay down the loan at any time if I want to as I am able to deposit money in FIDC-insured accounts at a higher interest rate than my mortgage rate.

But seeking_north has in a way been more prudent than most - taking a fixed rate mortgage is very unusual here, most banks only offer it up to 10 years and those few who lock in the interest rate generally does it for 3 years which is really pointless in my opinion.
« Last Edit: November 09, 2020, 07:51:15 AM by habanero »

Plina

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Re: DONT Payoff your Mortgage Club
« Reply #2468 on: November 12, 2020, 03:54:22 AM »
Sit down and do the math if the market drops 40%  and stays that way for a couple of years right when the money is due in year 20.

Then the most obvious action would be to refinance the loan into another 20 or 30 years which is easy over here. As long as you have eligible collateral in form of a home with a value higher than the mortgage it is very hard to envision a scenario in which you have to pay down large amounts if you don't want to. The loan is probably gonna be pretty small compared to the value of the house due to inflation working for 20 years, unless something really bad happens to the housing market of course.

A lot can change between now and then of course, so the strategy is not without risk. The biggest is probably if realationship ends long before year 20 and they have to sell during a bad time in the housing market and are underwater on the mortgage. Mortgage interest is tax-deductible in Norway as well so the after-tax rate of the mortgage is 1.92%.

I would not do it myself. As mentioned earlier I only pay the interest on my mortgange now but 1) my mortgage is small relative to house value and income + I have enough safe assets to pretty much pay down the loan at any time if I want to as I am able to deposit money in FIDC-insured accounts at a higher interest rate than my mortgage rate.

But seeking_north has in a way been more prudent than most - taking a fixed rate mortgage is very unusual here, most banks only offer it up to 10 years and those few who lock in the interest rate generally does it for 3 years which is really pointless in my opinion.

If you sell before the end date of your fixed time period, dont you need to pay the interest difference if you canít transfer the loan to your new house? At least in Sweden, that works as a deterrent for longer term fixed rates. My loans are all variable due to this reason. There is no real incentive in the difference in interest rates either. I have a rate of 1,63% and a after taxe rate after deductions of 1,14 %.

habanero

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Re: DONT Payoff your Mortgage Club
« Reply #2469 on: November 12, 2020, 05:23:41 AM »
If you sell before the end date of your fixed time period, dont you need to pay the interest difference if you canít transfer the loan to your new house? At least in Sweden, that works as a deterrent for longer term fixed rates. My loans are all variable due to this reason. There is no real incentive in the difference in interest rates either. I have a rate of 1,63% and a after taxe rate after deductions of 1,14 %.

Yes, the fixed rate loan will have to be closed out at market value, so you have to pay if remaining market rate is lower and opposite you are paid the value if remaining rate is higher than market rate.

Your last point is a very common mistake to make (not saying you make it...) - the point of having a fixed rate is not to have a rate higher or lower than the prevailing floating rate, it is having predictable cashflows on the mortgage for a long time. In my opinion a lot more people here should have fixed rate loans, even if it is rather likely to loose money in the long run. The weirdest misconception out here is that you are doomed to loose as you are "betting against the bank". A bank giving fixed rate mortgages has no opinion on the future direction of interest rate as it is irrelevant, the risk is easy for the bank to hedge out so it does not matter at all.

Also, closing out the loan at market rate, moving and entering into a new fixed rate at new market rate vs moving loan to another house does not really make any difference. Bar a few token fees the value of the two operations is the same.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2470 on: November 12, 2020, 07:16:03 AM »
My check from the previous escroe account arrived the other day. I asked my MiL to lend me her lexus to drive to the bank because I wanted to carry that big check in a nice car.

Also she was parked behind me, she would have had to move it anyway.

Since this is MMM forum, I will acknowledge that finding a bank within biking radius is a long-term goal.

First payment on my shiny, new mortgage is due 12/1/2020.

achvfi

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Re: DONT Payoff your Mortgage Club
« Reply #2471 on: November 12, 2020, 07:23:27 AM »
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

I refinanced again, this time I pulled some cash out, leveraging up back to 75%. This time it cost me about $2000
Type ---> Refinance
Term ---> 30 year fixed
Interest rate ---> 2.875
Closing costs ---> 450 appraisal + ~$1100 Title + ~$500 Misc fees + fund escrow for a year
State/location ---> Midwest
Cashout? ---> yes

Plina

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Re: DONT Payoff your Mortgage Club
« Reply #2472 on: November 12, 2020, 11:31:49 AM »
If you sell before the end date of your fixed time period, dont you need to pay the interest difference if you canít transfer the loan to your new house? At least in Sweden, that works as a deterrent for longer term fixed rates. My loans are all variable due to this reason. There is no real incentive in the difference in interest rates either. I have a rate of 1,63% and a after taxe rate after deductions of 1,14 %.

Yes, the fixed rate loan will have to be closed out at market value, so you have to pay if remaining market rate is lower and opposite you are paid the value if remaining rate is higher than market rate.

Your last point is a very common mistake to make (not saying you make it...) - the point of having a fixed rate is not to have a rate higher or lower than the prevailing floating rate, it is having predictable cashflows on the mortgage for a long time. In my opinion a lot more people here should have fixed rate loans, even if it is rather likely to loose money in the long run. The weirdest misconception out here is that you are doomed to loose as you are "betting against the bank". A bank giving fixed rate mortgages has no opinion on the future direction of interest rate as it is irrelevant, the risk is easy for the bank to hedge out so it does not matter at all.

Also, closing out the loan at market rate, moving and entering into a new fixed rate at new market rate vs moving loan to another house does not really make any difference. Bar a few token fees the value of the two operations is the same.

I know the point is to have a predictable cash flow. I prefer the flexibility and in the long run lower cost of a variable rate. I have enough flexibility in my finances to be able to deal with the changes and it is basically a couple clicks in the internet bank to get a fixed rate so it should not take more than a couple of minutes to get one if needed for some reason.

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #2473 on: November 12, 2020, 11:37:25 AM »
Just to clarify, this thread mostly applies to US based mortgages. In places where long-ass, fixed rate mortgages are not the norm, the decision is much less clear-cut.

habanero

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Re: DONT Payoff your Mortgage Club
« Reply #2474 on: November 12, 2020, 11:46:54 AM »
Just to clarify, this thread mostly applies to US based mortgages. In places where long-ass, fixed rate mortgages are not the norm, the decision is much less clear-cut.
Out of curiosity - can you even get a truly floating-rate mortage in the US or is that an oddity so rare it doesn't really exist? Mine over here is very standard per local customs which means 30 years, floating rate, bank can adjust mortgage raye at any time for any reason but has to give me 6 weeks notice (this requirement is by law). In real life the rate fluctuates with the central bank rate and by extension short-term money market rates. but there is no direct link.

dragoncar

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Re: DONT Payoff your Mortgage Club
« Reply #2475 on: November 12, 2020, 12:00:32 PM »
Just to clarify, this thread mostly applies to US based mortgages. In places where long-ass, fixed rate mortgages are not the norm, the decision is much less clear-cut.
Out of curiosity - can you even get a truly floating-rate mortage in the US or is that an oddity so rare it doesn't really exist? Mine over here is very standard per local customs which means 30 years, floating rate, bank can adjust mortgage raye at any time for any reason but has to give me 6 weeks notice (this requirement is by law). In real life the rate fluctuates with the central bank rate and by extension short-term money market rates. but there is no direct link.

Not sure what ďtrulyĒ floating rate is. You can get very short lock in periods here but things still only adjust once per year, and they probably will still have limits on how much they adjust.  Itís not like you get charged daily interest at the prevailing rate

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2476 on: November 12, 2020, 12:01:46 PM »
The last two times I've asked, the nominal rate on the ARM was the same as the 30-year fixed. It seemed like there was no premium for taking on that interest rate risk after the five year risk-free period was up, and I don't believe in bearing risk without receiving a premium.

Plina

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Re: DONT Payoff your Mortgage Club
« Reply #2477 on: November 12, 2020, 12:45:51 PM »
My floating rate is locked for 3 months and I have to be notified if they are going to change the rate. The difference between the floating and the locked rate for 10 years is +0,3 % more for the locked rate.

A one year adjustment period would be considered locked here. It is the shortest locked period to chose.
« Last Edit: November 12, 2020, 12:47:32 PM by Plina »

habanero

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Re: DONT Payoff your Mortgage Club
« Reply #2478 on: November 12, 2020, 12:47:15 PM »

Not sure what ďtrulyĒ floating rate is. You can get very short lock in periods here but things still only adjust once per year, and they probably will still have limits on how much they adjust.  Itís not like you get charged daily interest at the prevailing rate

I meant more like the rate will adjust at some frequency for the entire life of the mortgage. If the adjustment is monthly or quarterly is off less importance, just that it is a floating rate mortgage for its entire life so you end up paying somewhere around some reference rate + some credit spread on top of it.

The mortgage market with Freddie & Fannie is very different from Europe and guess the end demand from investors is fixed rate instruments, but the refinancing option, sweet as it is when rates fall by a lot like they have now ain't cheap. Last figures I saw was that the 30y rate is roughly 0.50% higher than what it would be if you did not have tright to refinance at "no cost" if rates drop by enough to make it worthwhile given the associated costs.

Telecaster

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Re: DONT Payoff your Mortgage Club
« Reply #2479 on: November 12, 2020, 04:53:51 PM »
Out of curiosity - can you even get a truly floating-rate mortage in the US or is that an oddity so rare it doesn't really exist? Mine over here is very standard per local customs which means 30 years, floating rate, bank can adjust mortgage raye at any time for any reason but has to give me 6 weeks notice (this requirement is by law). In real life the rate fluctuates with the central bank rate and by extension short-term money market rates. but there is no direct link.

You can, in fact I've got one right now on an investment property.  In some circumstances they can be a good deal (mainly if you think you will sell your house in less than about seven years or so).  I really love the stability of the 30-fixed though.   

Vapour

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Re: DONT Payoff your Mortgage Club
« Reply #2480 on: November 13, 2020, 09:42:25 PM »
I closed today on my mortgage with LenderFI.

Balance: ~$114,000
Term: 30 year, fixed
Rate: 3.125%
Closing Cost: $0!  Lender credit covered them all.
Cash Out: No, but will get ~$100 back.  Loan balance is ~$200 high than current mortgage payoff.  $100 for pre-paid interest on new loan, $100 cash back to me.

The Good: LenderFI was pretty easy to work with.  Everything (until closing) was done online with e-signing and via e-mail communication for the most part which I prefer.  They were able to close exactly 3 weeks after I applied, which is much faster than the 3 months PenFed locked me for.  The rate is pretty decent considering my loan balance is pretty low.  Probably could have gotten 3% if I'd waiting a week.  Oh well.

The Bad: Things were a little stressful today.  They screwed up the loan amount on the closing disclosure they sent last night vs. a week ago.  Got it fixed, but it pushed back my scheduled closing time with the notary.  The notary who came to my house was a little flaky.  She was running late for the original time, then was over an hour late for the pushed back time.  It was pretty late by the time I finally finished signing the mountain of paperwork.  I asked them to send it to me for review earlier but of course they didn't so I rushed through it.  I have 3 days to cancel so will review it more in depth this weekend but it all seemed like standard stuff.

Hopefully it will get funded and my existing mortgage paid off next week.  I'll be happy to be done and looking forward to my sub $500 payment for another 30 years.

couponvan

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Re: DONT Payoff your Mortgage Club
« Reply #2481 on: November 14, 2020, 06:57:05 AM »
Has anyone refi'd with loanDepot lately?  We were supposed to close yesterday, and it didn't happen. Our rate lock of 2.5% 30 year expired yesterday - we told them they needed to extend it for free to us, but haven't heard back yet whether that will happen.  They have literally had EVERYTHING they asked for since day 1.  Yesterday they asked for 5 more items and had all of them within 1.5 hours of their request (updated bank statements (2) , tax docs (3)).  The initial part of the process was fine. Getting in touch with someone after has been a PITA.  I've been following up for the past month because we planned to have solar installed before the end of the year and cannot proceed until our refi is finished.  They said Monday for closing.  It better still be 2.5% or lower.

FIreDrill

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Re: DONT Payoff your Mortgage Club
« Reply #2482 on: November 14, 2020, 12:33:21 PM »
Has anyone refi'd with loanDepot lately?  We were supposed to close yesterday, and it didn't happen. Our rate lock of 2.5% 30 year expired yesterday - we told them they needed to extend it for free to us, but haven't heard back yet whether that will happen.  They have literally had EVERYTHING they asked for since day 1.  Yesterday they asked for 5 more items and had all of them within 1.5 hours of their request (updated bank statements (2) , tax docs (3)).  The initial part of the process was fine. Getting in touch with someone after has been a PITA.  I've been following up for the past month because we planned to have solar installed before the end of the year and cannot proceed until our refi is finished.  They said Monday for closing.  It better still be 2.5% or lower.

Dang, sorry you have been having issues with them.  I closed with LoanDepot about 2 months ago or so and it was a good experience for us.  Went smoothly and was comparable to all the other refinances we have done.  Hopefully they get their act together and you close soon.

sonofsven

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Re: DONT Payoff your Mortgage Club
« Reply #2483 on: November 17, 2020, 09:10:56 AM »
Thanks to the info on this thread and the Boglehead thread, I completed a refi with Lender Fi in September.
30 year fixed @ 3%, actual costs approx $800 in miscellaneous fees. Appraisal was waved, loan balance of $192,500.
Closing took just under 30 days, all online except for signing with a notary.
My ancient Acer finally died and so I did the entire process using my phone, scanning, printing, sending docs, kinda funny and amazing.
With the money I saved I bought a new Acer :-)
It's not the best terms I've seen but I was happy with it, it took quite a while to get my finances back in shape after an expensive divorce and some questionable (ie: bad) financial and life decisions in the ensuing years.
But that's fodder for a different post, right now I'm thrilled with the new terms and monthly savings of $480 per month, and if things play out I'll be looking to refi again in the spring at an even better rate!

AerynLee

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Re: DONT Payoff your Mortgage Club
« Reply #2484 on: November 17, 2020, 09:29:43 AM »
Closed on our new house last month and while I had previously always figured I'd pay off our mortgage (after everything else was paid off and 401ks are maxed), I'm happy to let this one ride

Purchase price: $242,000
Down payment: $36,300 (we actually got a lower interest rate for doing 15% down instead of 20%)
Loan Amount: $205,700
Term: 30 years
Interest rate: 2.625%
PMI: $22/month until I pay off the $12k needed to get to a 80% LTV

dandarc

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Re: DONT Payoff your Mortgage Club
« Reply #2485 on: November 17, 2020, 12:53:36 PM »
holy forking shirtballs - 2.625% fixed for 30 years !?

AerynLee

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Re: DONT Payoff your Mortgage Club
« Reply #2486 on: November 17, 2020, 12:59:41 PM »
holy forking shirtballs - 2.625% fixed for 30 years !?
Right?! And that was with no points. This should be long term home for us so I'm more than happy to just let that sucker ride other than maybe getting rid of the PMI

FIreDrill

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Re: DONT Payoff your Mortgage Club
« Reply #2487 on: November 17, 2020, 02:52:09 PM »
holy forking shirtballs - 2.625% fixed for 30 years !?
Right?! And that was with no points. This should be long term home for us so I'm more than happy to just let that sucker ride other than maybe getting rid of the PMI

Rates are awesome right now.   I'm getting greedy and hoping a 2.25% 30yr comes along over the next couple of months.  I'm at 2.75% right now but if we are able to get into 2.25% I would throw a little bit of cash at the principle to drop PMI and our mortgage payment would get to a place I never thought was possible when we first bought the house in our HCOL area.  We have already dropped our mortgage payment by 20% from when we first purchased 2 years ago but if the stars align and we get a 2.25% rate and drop PMI our payment will be down about 30% from our original purchase.  Talk about getting lucky with low rates and house appreciation.

dragoncar

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Re: DONT Payoff your Mortgage Club
« Reply #2488 on: November 18, 2020, 12:03:24 AM »
Off topic but... this is my first time with escrow (due to refi!).  How early do your services usually pay property taxes?  Like right before the due date?  I just donít trust these guys and starting to get anxious.  Plan to drop this escrow BS ASAP

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2489 on: November 18, 2020, 06:09:48 AM »
Why not enjoy the escrow and not having to think about something for once?

I stubbornly refused to do it for the first two houses I've owned (eleven years). Was not given the option for my current one (thirteen months, refinanced last month), but had the free cash to live my life while the escrow was doubled up. Our city moved their property tax office a lot farther from my workplace, so I stopped being able to walk over on my lunch break.

It's frustrating having them hold my money, but I gave myself permission to not think about it.

sherr

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Re: DONT Payoff your Mortgage Club
« Reply #2490 on: November 18, 2020, 07:37:51 AM »
Off topic but... this is my first time with escrow (due to refi!).  How early do your services usually pay property taxes?  Like right before the due date?  I just donít trust these guys and starting to get anxious.  Plan to drop this escrow BS ASAP

Depends on your mortgage company, but yeah Due Date, or I've even had one wait longer and pay right before the "pay by this day or else you'll incur a penalty" date (which is different). Yes it is annoying.

dragoncar

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Re: DONT Payoff your Mortgage Club
« Reply #2491 on: November 18, 2020, 03:35:23 PM »
Off topic but... this is my first time with escrow (due to refi!).  How early do your services usually pay property taxes?  Like right before the due date?  I just donít trust these guys and starting to get anxious.  Plan to drop this escrow BS ASAP

Depends on your mortgage company, but yeah Due Date, or I've even had one wait longer and pay right before the "pay by this day or else you'll incur a penalty" date (which is different). Yes it is annoying.

Hmm.. we are already past the technical due date.  But not the penalty date

Why not enjoy the escrow and not having to think about something for once?

I stubbornly refused to do it for the first two houses I've owned (eleven years). Was not given the option for my current one (thirteen months, refinanced last month), but had the free cash to live my life while the escrow was doubled up. Our city moved their property tax office a lot farther from my workplace, so I stopped being able to walk over on my lunch break.

It's frustrating having them hold my money, but I gave myself permission to not think about it.

How could I possibly enjoy that?  Itís NON OPTIMAL. And I have to TRUST SOMEONE ELSE. 

Itís actually not that bad because they have to pay me 2% interest which ainít bad these days

sherr

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Re: DONT Payoff your Mortgage Club
« Reply #2492 on: November 18, 2020, 03:38:14 PM »
Depends on your mortgage company, but yeah Due Date, or I've even had one wait longer and pay right before the "pay by this day or else you'll incur a penalty" date (which is different). Yes it is annoying.

Hmm.. we are already past the technical due date.  But not the penalty date

Wells Fargo?

dragoncar

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Re: DONT Payoff your Mortgage Club
« Reply #2493 on: November 18, 2020, 11:35:49 PM »
Depends on your mortgage company, but yeah Due Date, or I've even had one wait longer and pay right before the "pay by this day or else you'll incur a penalty" date (which is different). Yes it is annoying.

Hmm.. we are already past the technical due date.  But not the penalty date

Wells Fargo?

Servicer is the money source, which is basically owned by better mortgage.  They get... mixed reviews

Anyway if they donít pay up soon Iíll contact them before the penalty date.  Their website says I donít need to do anything with the tax bill.  I know Iím being irrationally paranoid but let me tell you about the time my garbage company tried to charge me late fees because they had been sending the bill to the wrong address (I had never dealt with them before so I didnít know if they had a quarterly billing cycle or what)

To pull things back on topic Iím super jelly with the great rates you all got.  At one point I saw a ďbestĒ rate but I wasnít fast/bold enough to snag it. 
« Last Edit: November 18, 2020, 11:40:44 PM by dragoncar »

Psychstache

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Re: DONT Payoff your Mortgage Club
« Reply #2494 on: November 19, 2020, 06:30:52 AM »
Why not enjoy the escrow and not having to think about something for once?

I stubbornly refused to do it for the first two houses I've owned (eleven years). Was not given the option for my current one (thirteen months, refinanced last month), but had the free cash to live my life while the escrow was doubled up. Our city moved their property tax office a lot farther from my workplace, so I stopped being able to walk over on my lunch break.

It's frustrating having them hold my money, but I gave myself permission to not think about it.

I prefer not because our tax bill is due between 11/1 and 1/31 for no penalty. This lets me get 2 tax payments into one calendar year to maximize SALT deductions. I can't ensure it will work that way with escrow. Plus, we have no fee online payment with our county office, so I could care less where they are located.

robartsd

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Re: DONT Payoff your Mortgage Club
« Reply #2495 on: November 19, 2020, 01:39:28 PM »
I prefer not because our tax bill is due between 11/1 and 1/31 for no penalty. This lets me get 2 tax payments into one calendar year to maximize SALT deductions. I can't ensure it will work that way with escrow. Plus, we have no fee online payment with our county office, so I could care less where they are located.
I wish I didn't have an escrow account when the deduction rules changed a few years back. I had plenty in my escrow account and the next major bill due from it was the April installment of my property taxes, but I couldn't get them to pay it early. Penalty date for the first installment on my property taxes is 12/10 so best I could do is 1.5 years of property tax in one tax year. If I also put two years of charitable giving into a tax year, I certainly could exceed the new standard deduction.

For now it doesn't matter as to me as I plan to defer enough 2020 & 2021 income in retirement savings to get my AGI below the threshold needed to qualify for the 50% Saver's Tax Credit. Will probably target AGI qualifying for only the 10% Saver's Tax Credit in 2022 or 2023 in order to replenish my savings buffer (my spend rate is a bit too high to stay under the required AGI indefinately); could look to maximize itemized deductions in the year I do that.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #2496 on: November 19, 2020, 02:03:50 PM »
Why not enjoy the escrow and not having to think about something for once?

I stubbornly refused to do it for the first two houses I've owned (eleven years). Was not given the option for my current one (thirteen months, refinanced last month), but had the free cash to live my life while the escrow was doubled up. Our city moved their property tax office a lot farther from my workplace, so I stopped being able to walk over on my lunch break.

It's frustrating having them hold my money, but I gave myself permission to not think about it.

I prefer not because our tax bill is due between 11/1 and 1/31 for no penalty. This lets me get 2 tax payments into one calendar year to maximize SALT deductions. I can't ensure it will work that way with escrow. Plus, we have no fee online payment with our county office, so I could care less where they are located.

This is a fantastic response! When the TCJA was passed in 2017, I figured out how to "pre-pay" several years' of church giving for the same reason.

dragoncar

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Re: DONT Payoff your Mortgage Club
« Reply #2497 on: November 19, 2020, 03:54:21 PM »
Update they paid it today so 3 weeks before the penalty date.  Handwringing for nothing!  Well just the regular enjoyment I get from handwringing

Why not enjoy the escrow and not having to think about something for once?

I stubbornly refused to do it for the first two houses I've owned (eleven years). Was not given the option for my current one (thirteen months, refinanced last month), but had the free cash to live my life while the escrow was doubled up. Our city moved their property tax office a lot farther from my workplace, so I stopped being able to walk over on my lunch break.

It's frustrating having them hold my money, but I gave myself permission to not think about it.

I prefer not because our tax bill is due between 11/1 and 1/31 for no penalty. This lets me get 2 tax payments into one calendar year to maximize SALT deductions. I can't ensure it will work that way with escrow. Plus, we have no fee online payment with our county office, so I could care less where they are located.

This is a fantastic response! When the TCJA was passed in 2017, I figured out how to "pre-pay" several years' of church giving for the same reason.

I did this too.  But is there really a problem prepaying your property tax bill outside of escrow if it helps your taxes?  Yes you will have to figure out how to get a refund, but usually the tax advantage is worth giving up even a years worth of returns (if you have to wait that long for an escrow reassessment)
« Last Edit: November 19, 2020, 04:15:35 PM by dragoncar »

robartsd

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Re: DONT Payoff your Mortgage Club
« Reply #2498 on: November 19, 2020, 04:56:04 PM »
I did this too.  But is there really a problem prepaying your property tax bill outside of escrow if it helps your taxes?  Yes you will have to figure out how to get a refund, but usually the tax advantage is worth giving up even a years worth of returns (if you have to wait that long for an escrow reassessment)
I suppose could have paid the property tax myself, but instead I made donations to my church early like talltexan (only 5 months worth in my case - my reserves were a bit lower than typical due to paying a sewer line replacement in August and burying my Dad in September that year). On January 1st, 2018, my bank accounts had barely enough to cover the bills scheduled to be paid a few days later. I could have been a bit more aggressive - I knew I had a paycheck sufficient to cover the bills that would be added to my account on the first business day of 2018.

kenmoremmm

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Re: DONT Payoff your Mortgage Club
« Reply #2499 on: November 19, 2020, 10:30:42 PM »
has anyone done a cash-out refi recently? if so, what rate and terms and with which lender? thanks!