DONT Payoff your Mortgage Club

[rmorris50]

Some people are interpreting the article to mean high credit score people have an absolute rate higher than lower? I didn’t get that. I got a mortgage rate for a good credit score will be marginally higher than it otherwise would have been before this change, to help out those with low credit scores.

Yeah prob not meaningful but I guess someone can claim a small victory for “helping” with the affordable housing situation.


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[ender]

https://www.urban.org/urban-wire/fannie-mae-and-freddie-macs-new-pricing-not-punishing-those-better-credit-follow-numbers has a graphic which is useful here, showing the change in upfront fee based on LTV and credit scores:

[grantmeaname]

This link does too. The new structure looks pretty fair to me - seems like it was really discontinuous before at arbitrary break points.

https://www.mortgagenewsdaily.com/markets/mortgage-rates-04212023

[RWD]

Mailed in the check for the first mortgage payment on our new house. 30-year fixed at 6.375%.... but still not planning on paying it off early. Hopefully refinancing will be an option in the future. I'll be missing the 3.125% on the previous house...

[dragoncar]

Mailed in the check for the first mortgage payment on our new house. 30-year fixed at 6.375%.... but still not planning on paying it off early. Hopefully refinancing will be an option in the future. I'll be missing the 3.125% on the previous house...

Just took a second for home improvements at 6.3%.  Not gonna pay it off just yet, factoring tax deductions.

Really kicking myself for not cashing out when we refinanced three years ago— at that point the extra cash wouldn’t be deductible but at that rate it wouldn’t have mattered

[TheAnonOne]

Mailed in the check for the first mortgage payment on our new house. 30-year fixed at 6.375%.... but still not planning on paying it off early. Hopefully refinancing will be an option in the future. I'll be missing the 3.125% on the previous house...

Congratulations, first off!

At 6.4% you could conceivably make an argument for paying it down early I think. This is the first time in this boards (shortish) history that it MIGHT be mathematically OK to do so. Even if the market beats it, 6.4% is a decent return.

I had a 4% $450k note from 2019 that got refi'ed TWICE during 2020-2021 pandemic down to 3.25% and again to 2.75%. I'm feeling pretty fortunate on the timing of the whole thing, considering the house shot from 500k(ish) to a bit over 700k in value with the payment being under 3k yet. (still, about 2x higher than I realistically wanted, but what are you going to do?)

[RWD]

Mailed in the check for the first mortgage payment on our new house. 30-year fixed at 6.375%.... but still not planning on paying it off early. Hopefully refinancing will be an option in the future. I'll be missing the 3.125% on the previous house...

Congratulations, first off!

At 6.4% you could conceivably make an argument for paying it down early I think. This is the first time in this boards (shortish) history that it MIGHT be mathematically OK to do so. Even if the market beats it, 6.4% is a decent return.

I had a 4% $450k note from 2019 that got refi'ed TWICE during 2020-2021 pandemic down to 3.25% and again to 2.75%. I'm feeling pretty fortunate on the timing of the whole thing, considering the house shot from 500k(ish) to a bit over 700k in value with the payment being under 3k yet. (still, about 2x higher than I realistically wanted, but what are you going to do?)

Even if the market doesn't beat it I would rather have the flexibility of liquid investments than locked up in home equity. Paying off this mortgage would more than halve our invested assets. Not acceptable. And of course, if we do get to refinance in the future the more debt remaining the better.

[Dicey]

Mailed in the check for the first mortgage payment on our new house. 30-year fixed at 6.375%.... but still not planning on paying it off early. Hopefully refinancing will be an option in the future. I'll be missing the 3.125% on the previous house...

Congratulations, first off!

At 6.4% you could conceivably make an argument for paying it down early I think. This is the first time in this boards (shortish) history that it MIGHT be mathematically OK to do so. Even if the market beats it, 6.4% is a decent return.

I had a 4% $450k note from 2019 that got refi'ed TWICE during 2020-2021 pandemic down to 3.25% and again to 2.75%. I'm feeling pretty fortunate on the timing of the whole thing, considering the house shot from 500k(ish) to a bit over 700k in value with the payment being under 3k yet. (still, about 2x higher than I realistically wanted, but what are you going to do?)

Even if the market doesn't beat it I would rather have the flexibility of liquid investments than locked up in home equity. Paying off this mortgage would more than halve our invested assets. Not acceptable. And of course, if we do get to refinance in the future the more debt remaining the better.

Where is a decent heart emoji when you need one?

[joe189man]

Mailed in the check for the first mortgage payment on our new house. 30-year fixed at 6.375%.... but still not planning on paying it off early. Hopefully refinancing will be an option in the future. I'll be missing the 3.125% on the previous house...

We are trading a 2.875% rate for a 5.5% rate, the new home is purchased and the old one should close mid July. I am also incredibly sad to lose that rate. Given our hopeful timeline we may consider some early payoff unless rates drop and we can refi at a lower rate

[dandarc]

Mailed in the check for the first mortgage payment on our new house. 30-year fixed at 6.375%.... but still not planning on paying it off early. Hopefully refinancing will be an option in the future. I'll be missing the 3.125% on the previous house...

We are trading a 2.875% rate for a 5.5% rate, the new home is purchased and the old one should close mid July. I am also incredibly sad to lose that rate. Given our hopeful timeline we may consider some early payoff unless rates drop and we can refi at a lower rate

5.5% is not as good as 2.875% obviously, but is still in the range where the move is probably hold the loan for the duration (and refinance if rates come down).

[NorthernIkigai]

thirty years of inflation at 9%+ would actually be really bad. You'd be well positioned with the Series I and the mortgage, but aren't the 1970s years when we saw most retirement failures in modeling?

Very good point.  I really meant that I'd like to lock in just the 9.6% rate for 30 years, not the inflation that goes with it!  I definitely do NOT want I bonds to continue to pay such high rates.  I agree that 30 years of 9% inflation would be very bad.  But for now, I bonds are the best game in town for something safe.  While they're still only paying 0% real, better than my savings account paying -9% real.

@NorthernIkigai - Definitely sounds worth it to drop your savings rate a bit to get some more space.  <800 square feet for 4 people sounds like it might be a tad tight!  Hope you're able to find something that works for you!

Thanks @Holocene! We're actually OK right now, I'm always amazed that many North Americans (even Mustachians!) seem to need so much space. But the kids are growing and it would be very nice to have at least another half bath and not just the one bathroom.

With prices for decent apartments in the size (still max 1k sq ft or so) and area we're considering starting from about 550 or 600k€, we're just patiently keeping an eye on the market and hoping for a rate rise and its effect on the market...

An update from the land of adjustable rate mortgages: A few months after I wrote this, we actually found a lovely and affordable 970 sqf apartment with everything we need. Well, we bought it, but it's not finished yet. It will be finished next summer, so we should sell our current apartment next spring some time with the caveat that we'll move out on an agreed date. We're still very happy in the current one, but that's because we know we'll be moving into a brand new one soon. If we would still be looking, we'd probably feel pretty stuck here right now.

So now we have 2 mortgages! The old one which has a current rate of 3.x% (which will go up soon again), and the new one for the new apartment (which we've only taken out partially so far) at 4.x%. Oh well, the 0.x% rates were great for the many years they lasted.

Although the cash flow looks bad at the moment, certainly with the second mortgage growing every few months, we're not worried. We'll also probably get quite a bit less for the old apartment than we had originally budgeted, since the whole market has stagnated due to the rising interest rates. But we're paying a bit less than we had originally budgeted (550--650k€) for the new apartment. And we have plenty of savings.

[dandarc]

Thinking about a home equity loan, even with rates for that at 7.5% (looking at 20-year term on this). Reasons to do it:

I think I can borrow about $90,000 this way (80% LTV if we take what Zillow says as an accurate-enough appraisel). That would make fully funding my solo-K and TIRA's for both my wife and myself pretty easy for 2023 and 2024. And maxing out both the soloK and tIRA for myself saves us about $9,000 in taxes each year vs. the plan of just maxing my wife's IRA (without maxing the soloK, I probably cannot deduct tIRA for myself) - so the first couple of years I come out ahead on tax savings alone vs. the interest rate. And we'd wind up invest those tax savings as well so, I'm seeing something like $110,000 that we'd have working for us in investments that is not there today if we made this move.

Main downside I can think of is that the interest rate is so high. I mean, should still work out but the margin of error is quite a bit smaller than when rates were 3%. I don't know if / or how long it would take to get to 3% rates again.

I don't know - I'm kinda wishy-washy on the whole thing. Last time I tried this move was 2021 just after I had gone back to self-employment after a short stint as a W2 employee and I didn't have the spoons to persevere when that caused the first place I tried to back out a month or two after the application. House value has gone up since then - kind of absurd to me for our house to have more than doubled since we bought it in 2014, but a house down the street really did sell for a price recently enough that makes $255K for our house seem low, if anything, so I guess that might be accurate enough. And of course the primary balance has gone down a bit in 2 years as well.

[RWD]

Thinking about a home equity loan, even with rates for that at 7.5% (looking at 20-year term on this).

A HELOC is a callable loan so it doesn't have the long term advantages of a mortgage. Short term for your tax advantages I could see it being worthwhile, but you should have a plan in place to pay it off rapidly if needed.

[dandarc]

Thinking about a home equity loan, even with rates for that at 7.5% (looking at 20-year term on this).

A HELOC is a callable loan so it doesn't have the long term advantages of a mortgage. Short term for your tax advantages I could see it being worthwhile, but you should have a plan in place to pay it off rapidly if needed.

It's not a HELOC

[Dicey]

Thinking about a home equity loan, even with rates for that at 7.5% (looking at 20-year term on this).

A HELOC is a callable loan so it doesn't have the long term advantages of a mortgage. Short term for your tax advantages I could see it being worthwhile, but you should have a plan in place to pay it off rapidly if needed.

HELOC rates are typically variable as well. As always, be sure to read the fine print before you sign.

[dandarc]

I'm looking at a FIXED RATE Home Equity Loan with a 20 year term. Not a HELOC.

[RWD]

Ah, gotcha. I always get those confused

[Dicey]

Hmmm, kind of quiet around here. I guess making regularly scheduled mortgage payments gets kind of ho-hum after a while. Congratulations to all you ho-hummers! Hope you're enjoying your summers.

[Telecaster]

I'd post more but I feel like it is gloating.  If we look back to the heyday of this board when interest rates were ~3.0% and compare them to today, we've now seen CPI core inflation has risen to over 6% and boring old 10 year treasuries are over 4%.   And over the last five years the S&P 500 is up over 50%.   Keeping your money out of the house may or may not have made you rich, but it for sure made you a nice big pile of money.   Plus in the event of an emergency or amazing financial opportunity,  you now have a big stack of liquid assets you can access at anytime, as opposed to having your money tied up in an illiquid asset that is expensive and time consuming to access.  That's the key to sleeping well at night. 

If that weren't good enough, thanks to inflation your future obligations are withering away.  What once seemed like an enormous debt has now been cut off at the knees.  All by doing nothing.  Which, by the way, is how I like doing things. 

Back in the day, we were banging on the DPYM drum pretty awful damn hard.  Maybe too hard (RIP @boarder42).   Point is, the ability to borrow hundreds of thousands of dollars, at a fixed rate, long term, non-callable, tax-advantaged loan at ~3% was the deal of a lifetime.   We weren't able to convince everyone we were staring the golden goose in the face, but we convinced a few.   I'm really happy with that. 

[nereo]

I'd post more but I feel like it is gloating.  If we look back to the heyday of this board when interest rates were ~3.0% and compare them to today, we've now seen CPI core inflation has risen to over 6% and boring old 10 year treasuries are over 4%.   And over the last five years the S&P 500 is up over 50%.   Keeping your money out of the house may or may not have made you rich, but it for sure made you a nice big pile of money.   Plus in the event of an emergency or amazing financial opportunity,  you now have a big stack of liquid assets you can access at anytime, as opposed to having your money tied up in an illiquid asset that is expensive and time consuming to access.  That's the key to sleeping well at night. 

If that weren't good enough, thanks to inflation your future obligations are withering away.  What once seemed like an enormous debt has now been cut off at the knees.  All by doing nothing.  Which, by the way, is how I like doing things. 

Back in the day, we were banging on the DPYM drum pretty awful damn hard.  Maybe too hard (RIP @boarder42).   Point is, the ability to borrow hundreds of thousands of dollars, at a fixed rate, long term, non-callable, tax-advantaged loan at ~3% was the deal of a lifetime.   We weren't able to convince everyone we were staring the golden goose in the face, but we convinced a few.   I'm really happy with that.

Yes, all of this.  At 2.7% fixed and the biggest (by far) line item in our expenses, our mortgage has kept our personal inflation rate low while so many others seems to have gone up by double digits in the last two years. The market returns coupled with steady expenses has made it harder to relate to many posters here who seem to be expressing genuine anxiety over their financial situation, even when we appear similar in terms of age, income and assets.

[midweststache]

I'd post more but I feel like it is gloating.  If we look back to the heyday of this board when interest rates were ~3.0% and compare them to today, we've now seen CPI core inflation has risen to over 6% and boring old 10 year treasuries are over 4%.   And over the last five years the S&P 500 is up over 50%.   Keeping your money out of the house may or may not have made you rich, but it for sure made you a nice big pile of money.   Plus in the event of an emergency or amazing financial opportunity,  you now have a big stack of liquid assets you can access at anytime, as opposed to having your money tied up in an illiquid asset that is expensive and time consuming to access.  That's the key to sleeping well at night. 

If that weren't good enough, thanks to inflation your future obligations are withering away.  What once seemed like an enormous debt has now been cut off at the knees.  All by doing nothing.  Which, by the way, is how I like doing things. 

Back in the day, we were banging on the DPYM drum pretty awful damn hard.  Maybe too hard (RIP @boarder42).   Point is, the ability to borrow hundreds of thousands of dollars, at a fixed rate, long term, non-callable, tax-advantaged loan at ~3% was the deal of a lifetime.   We weren't able to convince everyone we were staring the golden goose in the face, but we convinced a few.   I'm really happy with that.

I mean, you're not wrong. The NYT actually had an article on the rise of the "status" of the sub 3% mortgage rate and the envy/gloating/one-up-manship of interest rates not too long ago. It talks about interest rates as a new status symbol, but it's more about timing luck than anything.

I've gift linked the article below for all my fellow DPYM ho-hummers (love it, @Dicey!)

https://www.nytimes.com/2023/08/04/realestate/mortgage-rates-increase.html?unlocked_article_code=YCvvSH2WxLNki-tcfsHGt6z6Zu4ICjkJC3S7L3ybohEhc4mBpLZG0Y_2gQFIqbYQ7JTYugcClx3iqZT3zEvvQQT5Odk9l_LRjXOpNUZZbD3kCrYyaqybIWiVwnGJHWaAO5dYJ82kpwN4ucWk_nkxOGTYpOkD-Dj6C8nB1uN6yzRN9vPjSUklLJKE-tK6nqRmuaP9TC64QW3N8PtAoNiR7yW2Fp9JxuTdRtExX4FjqNv8M4bd9_ilXCYWWvmEPdu1sJbbIHaAu2KQKYpmDtgzLkndLlo2D2l9Ck0b6MnvTl7CjqDchHIcwRcll6VVTCEeBoKBkkC1PnHmGupsij21_bbjjzQ&smid=url-share

[Dicey]

Thanks for the link, @midweststache. Interesting read.

Calling it pure luck, or worse, pure dumb luck, is inaccurate,  IMO.

“Luck Is What Happens When Preparation Meets Opportunity" -Seneca

These mortgages didn't completely fall into their hands. They still had to complete all the steps it took to get them. Lenders weren't passing them out like candy, even if it was easier to qualify with super low rates.

There's a corollary I've been hearing that also grates on my nerves. Folks are saying they're "trapped" in their low-rate mortgages. Cry me a river.

I predict there will be a huge upsurge in additions, ADU's and general remodeling, as homeowners do everything they can to hang on to their super mortgage low rates.

[Psychstache]

Thanks for the link, @midweststache. Interesting read.

Calling it pure luck, or worse, pure dumb luck, is inaccurate,  IMO.

“Luck Is What Happens When Preparation Meets Opportunity" -Seneca

These mortgages didn't completely fall into their hands. They still had to complete all the steps it took to get them. Lenders weren't passing them out like candy, even if it was easier to qualify with super low rates.

There's a corollary I've been hearing that also grates on my nerves. Folks are saying they're "trapped" in their low-rate mortgages. Cry me a river.

I predict there will be a huge upsurge in additions, ADU's and general remodeling, as homeowners do everything they can to hang on to their super mortgage low rates.

But they said "more about timing luck than anything", which is reasonably fair. I had to work hard to put myself in position to be a homeowner with good credit, but that wouldn't have meant diddly squat if it became a homeowner in 1979 instead of 2013.

Overall, you are more likely to be able to take advantage of your luck if you have worked hard to prepare. Doesn't mean you will get lucky, just that you are ready your number comes up.

[Dicey]

Thanks for the link, @midweststache. Interesting read.

Calling it pure luck, or worse, pure dumb luck, is inaccurate,  IMO.

“Luck Is What Happens When Preparation Meets Opportunity" -Seneca

These mortgages didn't completely fall into their hands. They still had to complete all the steps it took to get them. Lenders weren't passing them out like candy, even if it was easier to qualify with super low rates.

There's a corollary I've been hearing that also grates on my nerves. Folks are saying they're "trapped" in their low-rate mortgages. Cry me a river.

I predict there will be a huge upsurge in additions, ADU's and general remodeling, as homeowners do everything they can to hang on to their super mortgage low rates.

But they said "more about timing luck than anything", which is reasonably fair. I had to work hard to put myself in position to be a homeowner with good credit, but that wouldn't have meant diddly squat if it became a homeowner in 1979 instead of 2013.

Overall, you are more likely to be able to take advantage of your luck if you have worked hard to prepare. Doesn't mean you will get lucky, just that you are ready your number comes up.

I was responding to Mr. Barker's quote, "Best financial decision of my life was pure luck. It’s just that simple.”

By "completing all the steps", I did not mean all the hoops lenders put buyers through to get a mortgage, I meant exactly what you said. Get enough education to get a good job, establish solid credit, save for a down payment, learn enough about the market to realize that rates were at historical lows, do enough research to buy a home that fits your needs, etc.

[nereo]

Didn’t we already have this “is a low interest rate dumb luck” a couple months ago?

[roomtempmayo]

Thinking about a home equity loan, even with rates for that at 7.5% (looking at 20-year term on this).

A HELOC is a callable loan so it doesn't have the long term advantages of a mortgage. Short term for your tax advantages I could see it being worthwhile, but you should have a plan in place to pay it off rapidly if needed.

It's not a HELOC

Why not a HELOC? 

If you take out a home equity loan, you're baking in today's interest rate for the life of the loan, or you'll need to refinance later.  I guess that's good if rates continue to go up, but a really can't see them going, and staying, all that much higher.

Home equity loans are usually lower by <1%.  But again, you're stuck at that rate.

Unless rates aren't going significantly up in the future, the HELOC seems like a better option to me.

[dragoncar]

When I was looking a heloc was actually a bit more than just a regular second mortgage

[catccc]

By "completing all the steps", I did not mean all the hoops lenders put buyers through to get a mortgage, I meant exactly what you said. Get enough education to get a good job, establish solid credit, save for a down payment, learn enough about the market to realize that rates were at historical lows, do enough research to buy a home that fits your needs, etc.

Don't forget doing the work to be born to a family in place where getting enough education is an even an option.  Oh, wait, that's truly pure luck.

[nereo]

By "completing all the steps", I did not mean all the hoops lenders put buyers through to get a mortgage, I meant exactly what you said. Get enough education to get a good job, establish solid credit, save for a down payment, learn enough about the market to realize that rates were at historical lows, do enough research to buy a home that fits your needs, etc.

Don't forget doing the work to be born to a family in place where getting enough education is an even an option.  Oh, wait, that's truly pure luck.

I know the sentiment you are trying to convey, but my immigrant grandparents would furiously object that it was “pure luck” that their children were born in a place where a good education was readily available for their children.

[Fomerly known as something]

Thanks for the link, @midweststache. Interesting read.

Calling it pure luck, or worse, pure dumb luck, is inaccurate,  IMO.

“Luck Is What Happens When Preparation Meets Opportunity" -Seneca

These mortgages didn't completely fall into their hands. They still had to complete all the steps it took to get them. Lenders weren't passing them out like candy, even if it was easier to qualify with super low rates.

There's a corollary I've been hearing that also grates on my nerves. Folks are saying they're "trapped" in their low-rate mortgages. Cry me a river.

I predict there will be a huge upsurge in additions, ADU's and general remodeling, as homeowners do everything they can to hang on to their super mortgage low rates.

I also hate the “stuck” with a low rate.  A house is either affordable to you or it isn’t.  Yeah at todays rates I wouldn’t be able to “afford” as high of a cost home, but in no means am I trapped.  If I wanted to move, I could.  Rates aren’t stopping me.  I’d just need to make my decision of how much I could afford based on the new rates.

[dragoncar]

For me it’s just annoying that I could sell my house and buy an equally priced house somewhere else but would be in a far worse financial position due to higher rates and higher property taxes (CA quirk).   Cry my a river I know!

[RWD]

We have 14 years left (15 year mortgage) at 3.125%. Too good of a rate to pay down faster. Principal balance is about $178k right now.

Today I say goodbye to our 3.125% mortgage. Too bad we couldn't keep it forever. I'll be making minimum payments on our new mortgage (30-years at 6.375%), but it just isn't going to be as lucrative.

[Dicey]

For me it’s just annoying that I could sell my house and buy an equally priced house somewhere else but would be in a far worse financial position due to higher rates and higher property taxes (CA quirk).   Cry my a river I know!

Yup. Same here. We'd like to downsize, but we'll be paying the same taxes, or more, on a smaller, less attractive property. MPP.

[ChpBstrd]

For me it’s just annoying that I could sell my house and buy an equally priced house somewhere else but would be in a far worse financial position due to higher rates and higher property taxes (CA quirk).   Cry my a river I know!

Yup. Same here. We'd like to downsize, but we'll be paying the same taxes, or more, on a smaller, less attractive property. MPP.

Makes me wonder if the property bubble will be a boon to localities with property taxes. If the politicians weren't siphoning funds away to their charter school donors, public schools would be flush.

[Dicey]

For me it’s just annoying that I could sell my house and buy an equally priced house somewhere else but would be in a far worse financial position due to higher rates and higher property taxes (CA quirk).   Cry my a river I know!

Yup. Same here. We'd like to downsize, but we'll be paying the same taxes, or more, on a smaller, less attractive property. MPP.

Makes me wonder if the property bubble will be a boon to localities with property taxes. If the politicians weren't siphoning funds away to their charter school donors, public schools would be flush.

Citation, please?

[ender]

There's a corollary I've been hearing that also grates on my nerves. Folks are saying they're "trapped" in their low-rate mortgages. Cry me a river.

Eh, as someone in this boat (the DPYMC as well as wanting to move, but having a sub 3% 30 year) I get it.

Moving even laterally would be a meaningfully higher cost. Moving "up" in house, or in our case to move to an acerage, means we'd be buying a more expensive house plus having nearly a 3x mortgage rate.

It's not "trapped" but it's sure as hell a ton more expensive relative to our current place in basically every regard - housing on the whole went up, rates went way up, and we'd be moving to a more expensive place compared to our current house.

All three of those factors add cost. Only one is in our control - the last one.

[ChpBstrd]

For me it’s just annoying that I could sell my house and buy an equally priced house somewhere else but would be in a far worse financial position due to higher rates and higher property taxes (CA quirk).   Cry my a river I know!

Yup. Same here. We'd like to downsize, but we'll be paying the same taxes, or more, on a smaller, less attractive property. MPP.

Makes me wonder if the property bubble will be a boon to localities with property taxes. If the politicians weren't siphoning funds away to their charter school donors, public schools would be flush.

Citation, please?

https://www.washingtonpost.com/business/2022/05/05/property-taxes-us-homes-rose-328-billion-2021-report-finds/
https://www.arkansasonline.com/news/2023/mar/10/what-you-need-to-know-about-arkansas-learns/
https://thejournal.com/articles/2018/01/30/yes-charters-do-hurt-public-school-funding.aspx
https://www.washingtonpost.com/education/2021/12/01/bloomberg-donates-750billion-charter-schools/
https://www.mediamatters.org/daily-caller/here-are-corporations-and-right-wing-funders-backing-education-reform-movement

[Dicey]

For me it’s just annoying that I could sell my house and buy an equally priced house somewhere else but would be in a far worse financial position due to higher rates and higher property taxes (CA quirk).   Cry my a river I know!

Yup. Same here. We'd like to downsize, but we'll be paying the same taxes, or more, on a smaller, less attractive property. MPP.

Makes me wonder if the property bubble will be a boon to localities with property taxes. If the politicians weren't siphoning funds away to their charter school donors, public schools would be flush.

Citation, please?

https://www.washingtonpost.com/business/2022/05/05/property-taxes-us-homes-rose-328-billion-2021-report-finds/
https://www.arkansasonline.com/news/2023/mar/10/what-you-need-to-know-about-arkansas-learns/
https://thejournal.com/articles/2018/01/30/yes-charters-do-hurt-public-school-funding.aspx
https://www.washingtonpost.com/education/2021/12/01/bloomberg-donates-750billion-charter-schools/
https://www.mediamatters.org/daily-caller/here-are-corporations-and-right-wing-funders-backing-education-reform-movement

Thank you. I have no children; this issue has not been on my radar. I'll dig in.

[neo von retorch]

There's a corollary I've been hearing that also grates on my nerves. Folks are saying they're "trapped" in their low-rate mortgages. Cry me a river.

Eh, as someone in this boat (the DPYMC as well as wanting to move, but having a sub 3% 30 year) I get it.

Moving even laterally would be a meaningfully higher cost. Moving "up" in house, or in our case to move to an acerage, means we'd be buying a more expensive house plus having nearly a 3x mortgage rate.

It's not "trapped" but it's sure as hell a ton more expensive relative to our current place in basically every regard - housing on the whole went up, rates went way up, and we'd be moving to a more expensive place compared to our current house.

All three of those factors add cost. Only one is in our control - the last one.

Disclaimer: I don't like popular threads so I tend to avoid them or delete my posts a day or two after contributing because I'm tired of seeing it pop up in my unread list!


We are in this boat. Due to changing life circumstances (the death of a loved family dog, in-laws moving away, other in-law family strife) our location and the size of our house are both high sub-optimal. So we are likely to sell and move, going from a 2.99% 30 year mortgage to something like a 7% 30 year mortgage. If we bought a house that cost exactly what we net after selling (where you lose about 10% of a home's value to transaction costs) and we put 100% of equity towards a down payment, our P&I portion of the payment would increase by 53% ($1185 to $1816).

Instead, we do expect to shop around for a smaller home, smaller property, in a lower cost area, and hope to offset some of the cost to approach our current mortgage payment. We'll still be paying much more every month in interest.

[ender]

Disclaimer: I don't like popular threads so I tend to avoid them or delete my posts a day or two after contributing because I'm tired of seeing it pop up in my unread list!

btw the best way to handle this is using https://forum.mrmoneymustache.com/profile/?area=notification

I exclusively use this as my "things to check" which I find immensely better than doing what you are doing. I just unfollow things where I don't want to check them again.

[catccc]

By "completing all the steps", I did not mean all the hoops lenders put buyers through to get a mortgage, I meant exactly what you said. Get enough education to get a good job, establish solid credit, save for a down payment, learn enough about the market to realize that rates were at historical lows, do enough research to buy a home that fits your needs, etc.

Don't forget doing the work to be born to a family in place where getting enough education is an even an option.  Oh, wait, that's truly pure luck.

I know the sentiment you are trying to convey, but my immigrant grandparents would furiously object that it was “pure luck” that their children were born in a place where a good education was readily available for their children.

I’m first generation American born.  It was MY pure luck that I was born to my parents here in the US rather than to another set of parents in a 3rd world country.  It is also due to baller audacity and vision that my parents ended up here, and for that I’m very grateful.  If my parents want to take credit for my excellent financial standing, I will happily have that, they deserve it and so much more.  (It’s also my parents pure luck that they were both born into families that could afford good schools so they would have the educations and resources needed to move to and excel in the US.  Idk how far back you want to take this, it could go for a long time…).

Your grandparents may toot their horns all they like for leaving wherever they came from. 

I take issue when people toot their own without acknowledging privilege.  Or tout bootstrap shit like anyone can do it.  Yes, some people make it out of bad situations.  That doesn’t mean everyone can.

[ATtiny85]

Blah blah blah clipped.

Yes, some people make it out of bad situations.  That doesn’t mean everyone can.

Doesn’t mean everyone can’t either. Losers make excuses, winners make it happen. We can all tell stories all day about the privileged kid who spends their time in rehab, and about that dirt poor kid from the rough side of town who is a community or business leader.

I don’t see the benefit of claiming luck, either good or bad had the first fucking thing to do with where someone sits today. What matters to me is what are you going to do with this day and the ones after it. Nereo's grandparents said “what we are going to do is work to get our families in a better situation. Starting right now.”  They created the luck for their families. They created that privilege. Everyone should assess their situation and take appropriate action to create their own luck. We try to guide folks on this board to do must that. This thread is trying to help people see that some types of debt is OK when used properly. We (you specifically provide lots of great comments) try to work with people within their means to reach their goals.

[dragoncar]

TLDR pull yourself up by your bootstraps

Be thankful you are lucky enough to have boots

[ender]

Blah blah blah clipped.

Yes, some people make it out of bad situations.  That doesn’t mean everyone can.

Doesn’t mean everyone can’t either. Losers make excuses, winners make it happen. We can all tell stories all day about the privileged kid who spends their time in rehab, and about that dirt poor kid from the rough side of town who is a community or business leader.

I don’t see the benefit of claiming luck, either good or bad had the first fucking thing to do with where someone sits today. What matters to me is what are you going to do with this day and the ones after it. Nereo's grandparents said “what we are going to do is work to get our families in a better situation. Starting right now.”  They created the luck for their families. They created that privilege. Everyone should assess their situation and take appropriate action to create their own luck. We try to guide folks on this board to do must that. This thread is trying to help people see that some types of debt is OK when used properly. We (you specifically provide lots of great comments) try to work with people within their means to reach their goals.

There's a ton of value in understanding other people's situations.

For example, do you vote? Likely your vote in some way is related to this entire question.

People's experiences and backgrounds also determine how likely they are to be able to take action based on their luck. Or how powerful their luck making machine is.

You are rather writing off the aspect of luck, or if you like privilege, as it applies to people. Yes, people should consider their actions they do to create more luck. But not understanding and recognizing the underlying factors results in a bias.

Basically, if you can't understand this, your thought process will be totally based on survivorship bias. "Oh, well Nereo's family pulled themselves up by their bootstraps. Not sure why everyone just doesn't do it, if they don't must be their fault."

Yes, it's their "fault" if they do not pull themselves up by their bootstraps and just decide "you know what I want to win today." But that fault is a combination of circumstances as well as their actions. Ignoring either is problematic.

It's kind of like being 6'8 in high school wanting to play basketball professionally. Are you guaranteed to be awesome at it? Does being above average height mean you're going pro NBA? Of course not. You only get to do that if you actually play. But are you more likely to be good at basketball if you are above average height? Is it easier for you to pursue basketball professionally than someone who is 5'2? Yes, of course.

[simonsez]

There's a corollary I've been hearing that also grates on my nerves. Folks are saying they're "trapped" in their low-rate mortgages. Cry me a river.

Eh, as someone in this boat (the DPYMC as well as wanting to move, but having a sub 3% 30 year) I get it.

Moving even laterally would be a meaningfully higher cost. Moving "up" in house, or in our case to move to an acerage, means we'd be buying a more expensive house plus having nearly a 3x mortgage rate.

It's not "trapped" but it's sure as hell a ton more expensive relative to our current place in basically every regard - housing on the whole went up, rates went way up, and we'd be moving to a more expensive place compared to our current house.

All three of those factors add cost. Only one is in our control - the last one.

I'm thrilled (certainly not crying!) with the rate on our current mortgage and am not looking to change where we live on a medium term horizon unless we really need to.  We have a 2 BR/1BA brick house that serves the needs of two adults quite well, even with one of them working from home in a permanent office space upstairs.   The upstairs is more like an attic (there are 2 rooms with barely enough space for a human to fit through the windows but I'm not calling them bedrooms) and would need major HVAC work plus maybe conversion to a 1/2 bath of one of the corridor closets if we have more than 1 child and for a human to be comfortable enough to sleep.  It's all tiny violin types of problems, I would like to always have a guest room (that can double as many things) and if mortgages were still low and even if we never had children or just 1, we would still want to move for a few reasons.  The sub-3% mortgage relative to current rates changes our calculus somewhat.  It's a good problem to have, i.e. staying perhaps longer than intended in your affordable first starter house to save $.

I don't want a McMansion but I also don't want to stay in the opposite end of the spectrum for decades, either.  I love our current house but the longer we stay here (while already having it in our mind that it's not where we envision ourselves forever) the minor issues become more and more grating and possibly turn into major issues.  Saying we're trapped is too strong of a term but I understand the sentiment.

[nouseforausername]

By "completing all the steps", I did not mean all the hoops lenders put buyers through to get a mortgage, I meant exactly what you said. Get enough education to get a good job, establish solid credit, save for a down payment, learn enough about the market to realize that rates were at historical lows, do enough research to buy a home that fits your needs, etc.

Don't forget doing the work to be born to a family in place where getting enough education is an even an option.  Oh, wait, that's truly pure luck.

I know the sentiment you are trying to convey, but my immigrant grandparents would furiously object that it was “pure luck” that their children were born in a place where a good education was readily available for their children.

I’m first generation American born.  It was MY pure luck that I was born to my parents here in the US rather than to another set of parents in a 3rd world country.  It is also due to baller audacity and vision that my parents ended up here, and for that I’m very grateful.  If my parents want to take credit for my excellent financial standing, I will happily have that, they deserve it and so much more.  (It’s also my parents pure luck that they were both born into families that could afford good schools so they would have the educations and resources needed to move to and excel in the US.  Idk how far back you want to take this, it could go for a long time…).

Your grandparents may toot their horns all they like for leaving wherever they came from. 

I take issue when people toot their own without acknowledging privilege.  Or tout bootstrap shit like anyone can do it.  Yes, some people make it out of bad situations.  That doesn’t mean everyone can.

I wonder who could survive this poster's virtue acid test. I'd love to meet that apotheosis of Anti Privilege.

Anyhoo, still privileged to be riding with a 2.75% mortgage.

[Radagast]

https://forum.mrmoneymustache.com/investor-alley/time-to-pay-off-recent-mortgages/

;)

[catccc]

Doesn’t mean everyone can’t either. Losers make excuses, winners make it happen. We can all tell stories all day about the privileged kid who spends their time in rehab, and about that dirt poor kid from the rough side of town who is a community or business leader.

I don’t see the benefit of claiming luck, either good or bad had the first fucking thing to do with where someone sits today. What matters to me is what are you going to do with this day and the ones after it. Nereo's grandparents said “what we are going to do is work to get our families in a better situation. Starting right now.”  They created the luck for their families. They created that privilege. Everyone should assess their situation and take appropriate action to create their own luck. We try to guide folks on this board to do must that. This thread is trying to help people see that some types of debt is OK when used properly. We (you specifically provide lots of great comments) try to work with people within their means to reach their goals.

There's a ton of value in understanding other people's situations.

For example, do you vote? Likely your vote in some way is related to this entire question.

People's experiences and backgrounds also determine how likely they are to be able to take action based on their luck. Or how powerful their luck making machine is.

You are rather writing off the aspect of luck, or if you like privilege, as it applies to people. Yes, people should consider their actions they do to create more luck. But not understanding and recognizing the underlying factors results in a bias.

Basically, if you can't understand this, your thought process will be totally based on survivorship bias. "Oh, well Nereo's family pulled themselves up by their bootstraps. Not sure why everyone just doesn't do it, if they don't must be their fault."

Yes, it's their "fault" if they do not pull themselves up by their bootstraps and just decide "you know what I want to win today." But that fault is a combination of circumstances as well as their actions. Ignoring either is problematic.

It's kind of like being 6'8 in high school wanting to play basketball professionally. Are you guaranteed to be awesome at it? Does being above average height mean you're going pro NBA? Of course not. You only get to do that if you actually play. But are you more likely to be good at basketball if you are above average height? Is it easier for you to pursue basketball professionally than someone who is 5'2? Yes, of course.

You said it so eloquently, thanks. 

Didn't pay off my mortgage again!

https://forum.mrmoneymustache.com/investor-alley/time-to-pay-off-recent-mortgages/

;)

Thanks for this link, I'm still not paying off my mortgage, but recently took on additional debt at 4.99%.  Debatable move, but I'm comfortable with it.

[Retire-Canada]

FWIW - we've got a variable rate mortgage up here in Canukistan. No plans to do anything other than ride the rate wave up and down. I plan on extending amortization and/or pulling out equity as we get to each 5 year renewal cycle. No plans to ever not have a mortgage. At least living in the current megaquake prone location.

[Dicey]

Thanks for this link, I'm still not paying off my mortgage, but recently took on additional debt at 4.99%.  Debatable move, but I'm comfortable with it.

That still seems like a good rate. What are your plans for the $$, if you don't mind my asking.