Time to ReFi that house/property!

[Kennyd4110]

Our story:
We were at 4.75% with 19.5 years to go on a 30 year fixed mortgage. We had done a refi 10 years ago to combine a 1st and 2nd mortgage that we had from building our house in 2003 - long story but it basically had to do with a "jumbo" loan at the time and higher interest rates for them.

Today we locked in at 2.99% for a 15 year fixed, even after about $10,000.00 in fees our payment is virtually the same, but 4.5 years shorter!

While this is GREAT, we missed 2.75% by few hours this past Tuesday

 

[SidecarFlip]

Happy for ya. The farm has been paid off for years. No payment here, just RE taxes. Mortgage payments and taxes never bothered me anyway. Was always an off set against the farm income anyway.

 

[sdk1968]

yep im still setting on a 5% fixed rate for another 20 years.

if we can get it down to a 2.75 or anything sub 3? it would be worth it to refi it for us.

was always taught that if you cant move 2 full points..... its not worth doing a refi.

 

[Kennyd4110]

yep im still setting on a 5% fixed rate for another 20 years.

if we can get it down to a 2.75 or anything sub 3? it would be worth it to refi it for us.

was always taught that if you cant move 2 full points..... its not worth doing a refi.

You need to talk to someone NOW. Get the ball rolling and lock in at 3 or less. The two point rule is very conservative, dropping 1.5 or even 1 can make sense in some cases.

 

[Magicman]

Good move and smart to be looking at your long-range goals. Better to pay yourself rather than someone else.

 

[RCW]

Great job Kenny!

I was looking at rates too; we’re almost paid off on a home equity line of credit. Maybe a year away from paid.

I figured it wasn’t worth tinkering given our position, but it sure makes sense for most!

We refinanced a couple times over the years. Always worked to our advantage. The current line of credit paid for A LOT of home improvements over the last 10 years, and now we’re seeing the light at the end of the tunnel on that too.

Great advice, Kenny.


Sent from my iPhone using Tapatalk

 

[PHPaul]

One advantage of being old: I paid the house off 20+ years ago and I make the last payment on the Cabota next month. I won't owe anybody anything for the first time in a while! Not even any credit card debt.

I'm sure that'll be temporary, it's plumb un-American not to have some sort of payment...

 

[fruitcakesa]

One advantage of being old: I paid the house off 20+ years ago and I make the last payment on the Cabota next month. I won't owe anybody anything for the first time in a while! Not even any credit card debt.

I'm sure that'll be temporary, it's plumb un-American not to have some sort of payment...

Not so funny, when we built our home we did it "the pay as you go" way.
Took us many years but we were/are debt free
A co-worker of my wife made that exact statement to her when he learned of our way of living.

 

[Poohbear]

Only debt we have is on a car we bought in Dec. We went to buy intending to pay on the spot but when I called my CU to transfer the funds they gave me a really low rate to borrow on my money. Was going to pay off after 90 days as I only did this as we haven't had any debt in close to 20 years.
Each of us has to decide if things like refinancing is what's best for each of us. I have no problem with a 1st mortgage when you need a home but I would have to be in really dire straights to do a home equity loan. It's my raising as I was told over & over growing up to allways get your house paid for as a priority.

 

[armylifer]

Instead of refinancing consider accelerating payoff by paying this months payment of interest + principal and paying an extra principal payment each month. I paid off a 30 year 10% VA loan in 9 years and 3 months that way. When I bought that house in 1987 a conventional loan was going for 12%. VA or FHA loans went about 2% lower than conventional loans, at that time. Anyway, the point is that you can accelerate payoff without refinancing and still end up paying a lot less in total interest.

 

[ccoon520]

Instead of refinancing consider accelerating payoff by paying this months payment of interest + principal and paying an extra principal payment each month. I paid off a 30 year 10% VA loan in 9 years and 3 months that way. When I bought that house in 1987 a conventional loan was going for 12%. VA or FHA loans went about 2% lower than conventional loans, at that time. Anyway, the point is that you can accelerate payoff without refinancing and still end up paying a lot less in total interest.

Yes but consider this. If you can lower your payments by $100 a month and then do the accelerated payoff then you put an addition $1200 a year towards your principal. So lets say that you refinanced 4 years and 3 months into your loan (for easy of math) you would have saved an extra 6 grand and with closing costs on refinance being about 2-3k depending on the amount that is a cool 3k to spend on kubota merch.

My wife and I refinanced in December down from something like 5.125 to 3.875 and have a payment that is more than 80 dollars less a month. We are still putting additional funds towards the loan but now have more flexibility and safety should one of us lose our jobs.

Also rates are starting to increase again due to the increased demand for refinancing. It might be worth waiting a little bit for the craziness to die down and let the mortgage departments catch back up.

 

[armylifer]

Yes but consider this. If you can lower your payments by $100 a month and then do the accelerated payoff then you put an addition $1200 a year towards your principal. So lets say that you refinanced 4 years and 3 months into your loan (for easy of math) you would have saved an extra 6 grand and with closing costs on refinance being about 2-3k depending on the amount that is a cool 3k to spend on kubota merch.

My wife and I refinanced in December down from something like 5.125 to 3.875 and have a payment that is more than 80 dollars less a month. We are still putting additional funds towards the loan but now have more flexibility and safety should one of us lose our jobs.

Also rates are starting to increase again due to the increased demand for refinancing. It might be worth waiting a little bit for the craziness to die down and let the mortgage departments catch back up.

There are a lot of variables to your scenario. Things such as how big the loan is, the re-fi costs and fees, credit rating, length of loan, as well as restrictions on prepayment or accelerated payoff.

I was just presenting another scenario for consideration, not a one size fits all solution. At the time I was talking about, there were no loan interest rates available that would have saved me any money whatsoever through a re-fi solution.

All I am suggesting is that there are more avenues available than just thinking about re-financing. I have seen too many people take on a loan of longer duration at a slightly lower payment only to spend the difference on toys and still not have saved anything due to the longer payment schedule. They often end up paying a lot more in the end because they locked in on a longer term loan. The enticement of a lower interest rate for a longer period of time is powerful but expensive in the end.

 

[ccoon520]

There are a lot of variables to your scenario. Things such as how big the loan is, the re-fi costs and fees, credit rating, length of loan, as well as restrictions on prepayment or accelerated payoff.

I was just presenting another scenario for consideration, not a one size fits all solution. At the time I was talking about, there were no loan interest rates available that would have saved me any money whatsoever through a re-fi solution.

All I am suggesting is that there are more avenues available than just thinking about re-financing. I have seen too many people take on a loan of longer duration at a slightly lower payment only to spend the difference on toys and still not have saved anything due to the longer payment schedule. They often end up paying a lot more in the end because they locked in on a longer term loan. The enticement of a lower interest rate for a longer period of time is powerful but expensive in the end.

I apologize my reply came off wrong and your avenue works very well to save significant money as well. I wholeheartedly agree there are a lot of factors when considering refinancing or paying down a loan or both.

All I meant to suggest is that if you combine a refinance and your accelerated paydown there is even more meat on the bone there. But in general I believe as long as you can focus on reducing your debt to 0 no matter how you do it (well as long as it is legal I guess).

 

[armylifer]

I apologize my reply came off wrong and your avenue works very well to save significant money as well. I wholeheartedly agree there are a lot of factors when considering refinancing or paying down a loan or both.

I may be the one that owes you the apology. Looking at my post it seems that I may have responded a little stronger than I intended to. My response was due to some of the financial devastation I saw while in my role as an advisor in my church.

The financial crisis in 2008 caused a few people in our church to lose their homes because they refinanced their home loans to a lower rate but longer term. When they lost their jobs they could no longer pay their home loans, even at the lower rate. They effectively lost all equity because of the re-fi so they could not even sell the home and get out without debt.

Anyway, banks do not offer anything for the benefit of their customers. So, let the buyer beware, or in this case the homeowner beware of predatory behavior by banks.

 

[PNWBXer]

Instead of refinancing consider accelerating payoff by paying this months payment of interest + principal and paying an extra principal payment each month. I paid off a 30 year 10% VA loan in 9 years and 3 months that way. When I bought that house in 1987 a conventional loan was going for 12%. VA or FHA loans went about 2% lower than conventional loans, at that time. Anyway, the point is that you can accelerate payoff without refinancing and still end up paying a lot less in total interest.

There is definitely a math problem in here somewhere. At 10%...you would think if you got it down to 5%....the interest savings alone...even with paying more principle every month....should be worth it. If you just paid what you'd been paying vice the new lower payment....you would pay it down a lot quicker. Dave Ramsey has a great Mortgage payoff calculator based on extra payments every month. Cool tool to tinker around with.....link below.

https://www.daveramsey.com/mortgage-payoff-calculator

 

[North Idaho Wolfman]

There is definitely a math problem in here somewhere. At 10%...you would think if you got it down to 5%....the interest savings alone...even with paying more principle every month....should be worth it. If you just paid what you'd been paying vice the new lower payment....you would pay it down a lot quicker. Dave Ramsey has a great Mortgage payoff calculator based on extra payments every month. Cool tool to tinker around with.....link below.

https://www.daveramsey.com/mortgage-payoff-calculator

At the time frame the armylifer was talking about 5% loans were unheard of.

As of a couple months ago a 10% loan would have been crazy high, so financing would be a smart choice if you had any length of time on the note.

We were on track to get 1.8% on our Home/property loan, just had to finish building my house (built all cash), to make it happen.
Now that thing have gone south, who knows when or if we'll be able to do anything close to that.

 

[armylifer]

There is definitely a math problem in here somewhere. At 10%...you would think if you got it down to 5%....the interest savings alone...even with paying more principle every month....should be worth it. If you just paid what you'd been paying vice the new lower payment....you would pay it down a lot quicker. Dave Ramsey has a great Mortgage payoff calculator based on extra payments every month. Cool tool to tinker around with.....link below.

https://www.daveramsey.com/mortgage-payoff-calculator

In post #12 I explained that there were no options for a lower refinance rate available that would have saved me anything. I had my loan paid off in October 1996. At that time the lowest rates available were in the 8% range. If I wanted to refinance and take on a longer loan, it would have cost me a lot more in interest for the life of the loan. That does not even take into account for the loan origination fees.

 

[RCW]

At the time frame the armylifer was talking about 5% loans were unheard of.

As of a couple months ago a 10% loan would have been crazy high

In post #12 I explained that there were no options for a lower refinance rate available that would have saved me anything.

We bought our place in 1991. We were at 7.5% at first, I think. Rates came down to 5-ish years later, and we pulled the trigger on a re-fi. I think we did the same a few years after that with a Home Equity Loan that paid off the mortgage.

We've owned (with the bank) our place 29 years, so we've seen the highs/lows, and have gone about things as we deemed prudent at the time. Each time we've altered our financing, it's been to our benefit. None of our refinancing involved credit card debt, etc., which is a good thing.

We've had just a Home Equity Line of Credit for about 12 years. Has helped kids' college expenses (twins went to Cornell University), partially bought a couple cars for kids, and about $50k worth of home improvements. We hold a balance of $15k now, which will be paid in full pretty quick. The house is much more valuable than before. That said, home values in our area are pretty low compared to national averages.

Not everyone's experience or position is the same, so it's tough for "Johnny" to tell "Billy" what he should do....

Like armylifer and Wolfman point out, there's a WHOLE BUNCH of moving parts with this stuff.

It is really easy to be a "Monday Morning Quarterback."

The OP Kenny simply pointed out his re-fi that made sense to him, and it sure made sense to me.....

YMMV....

 

[Poohbear]

You guys are kids. Our 1st was in 1968 with a 6.25 % FHA 30 yr loan and then sold and got a 5% conventional loan, then we decided to move out of Dallas in 1980. Interest was 18% on home loans. We put a lot down and made double payments most months sending in 2 checks with one marked principal only. It was tough and got it paid off . We sold that one in 97 & we carried the note @ 10% 15 yrs . They did a refinance & paid us off at about 5 years, we cried. They were still paying more int than principal.

 

[Workerbee]

Armylifer, I like your advice generally, but have a question for you. You say that refinancing would cause loss of equity. How can that be? Isnt equity simply the difference between market value and what you owe on the property? I do realize a home equity loan would cause a loss of equity, but cant see how a refinance just to get lower rates would. Can you explain that please?