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      03-05-2020, 01:51 PM   #45
Maynard
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Related to paying ahead towards principle in order to shorten the payoff time: Would it not make more sense for long term to put that extra money into a stock fund that can earn >6% rather than paying down the mortgage that is only 3%, (once you are off PMI)? Is there something I'm missing in this?
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      03-05-2020, 03:11 PM   #46
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Originally Posted by Maynard View Post
Related to paying ahead towards principle in order to shorten the payoff time: Would it not make more sense for long term to put that extra money into a stock fund that can earn >6% rather than paying down the mortgage that is only 3%, (once you are off PMI)? Is there something I'm missing in this?
Yes, risk. Some people don’t have the tolerance for the risk (volatility) of investing, especially in stocks/funds, compared with the security of no-debt home ownership. Personally I like the risk and the roller coaster (even the past 9 trading sessions), but not everyone feels the same!
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      03-05-2020, 03:39 PM   #47
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Originally Posted by 2000cs View Post
Yes, risk. Some people don’t have the tolerance for the risk (volatility) of investing, especially in stocks/funds, compared with the security of no-debt home ownership. Personally I like the risk and the roller coaster (even the past 9 trading sessions), but not everyone feels the same!
I was speaking to Run Silent (Anthony) not too long ago about keeping low-interest loans open in hopes of making more return investing the money, and he said the same thing you are; it's too much risk.

He had wonderful things to say about you in general, and I've been meaning to PM you about a couple of things.
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      03-05-2020, 05:23 PM   #48
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Here are some historical rate charts that date back to, like, forever:
https://fred.stlouisfed.org/series/MORTGAGE15US
https://fred.stlouisfed.org/series/MORTGAGE30US

Now seems like a good time ... how much lower could you honestly expect them to go? Not to mention, if you're dealing with a decent broker, they'll get you the lowest rate available between the time you start the process and the time you sign the dotted line anyway.
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      03-05-2020, 05:25 PM   #49
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When we bought our house (before the bubble popped), the mortgage company would only approve us for a 30-year 5/1 ARM even though I wanted a 15-year fixed. Their ARM was written with no anticipation that there could be a bubble pop, so they had no floor on downward moves and a 0.5% cap on raises. I was paying it on a 20-year pace.

The bubble popped a few months before the first adjustment, and because of the key fund they based the adjustment on, our interest went down from 4.25% to 0.25%! Even better, with the 0.5% cap on yearly increases they couldn't even get it back up to 3.25% for another six years even if the interest rate shot to 20% overnight! Long story short, we had three years of < 0.50% interest before the mortgage company decided to sell our money-losing mortgage to a slimy company that specialized in bankrupting/foreclosing on people with bad credit.

Having an 800+ credit score, we went to our local credit union and closed on the 15-year that I originally wanted as a re-fi at 2.65% in less than 48 hours. I'm paying it at a 10-year pace, and with any luck it will be paid off in five years...just in time for my early retirement to start.....
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      03-05-2020, 05:26 PM   #50
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From a major bank this afternoon:
“ Ψ Swap curve is pricing significant Fed easing into the forward curve (87.5 to almost 100bps of additional Fed easing in 2020)
Ψ Fed Cut Probabilities March 18th meeting: 100% for 50bps, 17% for 75bps
Ψ Fed Cut Probabilities April 29th meeting: 72.4% for 25bps (assumes 50bp cut occurred on March 18th)
Ψ 1M LIBOR forward curve pricing in .47% LIBOR in Sept of 2020
Ψ Given what we have seen from central banks over the last 10 years I think it is safe to say that central banks will ultimately throw everything and the kitchen sink at the situation if needed to help avoid a significant economic downturn (may need to pull non-traditional levers)”

Looks like rates may fall more.
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      03-05-2020, 07:24 PM   #51
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Quote:
Originally Posted by FCobra94 View Post
Here are some historical rate charts that date back to, like, forever:
https://fred.stlouisfed.org/series/MORTGAGE15US
https://fred.stlouisfed.org/series/MORTGAGE30US

Now seems like a good time ... how much lower could you honestly expect them to go? Not to mention, if you're dealing with a decent broker, they'll get you the lowest rate available between the time you start the process and the time you sign the dotted line anyway.
Thanks for posting. I am a fan of the FRED data tools.

What I see in those charts is that mortgage interest rates and recessions are unrelated, from a cause and effect point of view.

If that statement is true, it suggests that improperly loose lending standards, not low interest rates, were the cause of the financial crisis in 2009. In other words, its wasn't the low price of money that was the problem, but rather that lenders were lending to anyone that would fog a mirror. Borrowers who had insufficient means to service their debt.
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      03-06-2020, 07:12 AM   #52
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Quote:
Originally Posted by 2000cs View Post
From a major bank this afternoon:
“ Ψ Swap curve is pricing significant Fed easing into the forward curve (87.5 to almost 100bps of additional Fed easing in 2020)
Ψ Fed Cut Probabilities March 18th meeting: 100% for 50bps, 17% for 75bps
Ψ Fed Cut Probabilities April 29th meeting: 72.4% for 25bps (assumes 50bp cut occurred on March 18th)
Ψ 1M LIBOR forward curve pricing in .47% LIBOR in Sept of 2020
Ψ Given what we have seen from central banks over the last 10 years I think it is safe to say that central banks will ultimately throw everything and the kitchen sink at the situation if needed to help avoid a significant economic downturn (may need to pull non-traditional levers)”

Looks like rates may fall more.
I really hate the panic cut. We've had health scares before and the market has gained over 10% from the max drawdown in the subsequent 12 months each and every time. I would be utterly stunned if we saw another cut, of any magnitude, on the 18th. It's not like a rate cut is going to get people out to movie theaters, sporting events, and shopping malls.

As I've mentioned before, banks already have a massive backlog to clear before they feel even remotely incentivized to drop their rates.
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      03-06-2020, 08:52 AM   #53
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Quote:
Originally Posted by Maynard View Post
Related to paying ahead towards principle in order to shorten the payoff time: Would it not make more sense for long term to put that extra money into a stock fund that can earn >6% rather than paying down the mortgage that is only 3%, (once you are off PMI)? Is there something I'm missing in this?
in average / expected return term, yes, but in real life, we don't always get the average / expected return. depending on your age/risk appetite you make a different decision.
if you're in your 20s no kids sure put the majority of your wealth in the stock markets but as you age, got kids to support / future college bills to pay you gradually dial down your risk tolerance because you can't afford to be unlucky and take a 20% drop in your asset valuation that happen at the time you need the cash...
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      03-06-2020, 09:35 AM   #54
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Originally Posted by byroncheung View Post
in average / expected return term, yes, but in real life, we don't always get the average / expected return. depending on your age/risk appetite you make a different decision.
if you're in your 20s no kids sure put the majority of your wealth in the stock markets but as you age, got kids to support / future college bills to pay you gradually dial down your risk tolerance because you can't afford to be unlucky and take a 20% drop in your asset valuation that happen at the time you need the cash...
I disagree. You should always have an emergency fund of ~6 months of bills and beyond that you can invest with very little risk of having to sell in a downturn. It's not like we are talking about all or nothing.

There is a lot of opportunity in risk, and I personally carry low interest rate loan balances because I do make a lot more in the market when you average it over 5-10+ years. I am still relatively young so I will take all the risk I can right now.
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      03-06-2020, 10:01 AM   #55
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Quote:
Originally Posted by Hawkeye View Post
I disagree. You should always have an emergency fund of ~6 months of bills and beyond that you can invest with very little risk of having to sell in a downturn. It's not like we are talking about all or nothing.

There is a lot of opportunity in risk, and I personally carry low interest rate loan balances because I do make a lot more in the market when you average it over 5-10+ years. I am still relatively young so I will take all the risk I can right now.
Just want to clarify what do you disagree with? You do seem to agree in general the risk appetite should be related to age?
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      03-06-2020, 01:06 PM   #56
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Originally Posted by byroncheung View Post
Just want to clarify what do you disagree with? You do seem to agree in general the risk appetite should be related to age?
Yes, agree on that part. I disagree on lowering your risk tolerance based on family and kids. I think it should only really be correlated with your intended age of retirement or when you are planning on accessing the funds. You shouldn't really need to dip into your main investments for normal life events.
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      03-06-2020, 01:17 PM   #57
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Quote:
Originally Posted by Hawkeye View Post
I disagree on lowering your risk tolerance based on family and kids. I think it should only really be correlated with your intended age of retirement or when you are planning on accessing the funds. You shouldn't really need to dip into your main investments for normal life events.
Agreed.

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      03-06-2020, 02:02 PM   #58
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Just spoke to my mortgage guy. Refi rates got 1/8th worse while purchase rates hit all-time low. Volume is dictating rates, not economics.
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      03-09-2020, 08:58 PM   #59
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i just locked in 3.125% for a 30 fixed. its a pain in the ass because i just refi'd in november. the numbers just make sense, i'd be a fool not to- knock another almost $300 off just in interest a year into my mortgage.
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      03-10-2020, 12:16 PM   #60
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https://www.nerdwallet.com/mortgages...inance-savings

This can help you roughly decide how the math works out.
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      03-10-2020, 12:52 PM   #61
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I locked in at 4.125% on my mortgage back in July of 17' which was a fantastic rate at the time. Unfortunately, I had to/have been paying PMI of $100 per month since we did not have 20% to put down on the house due to the fact we needed a lot of cash to do some renovations.

Because home values have risen tremendously, not to mention all the work I've put into my house, my home is now worth much more than I paid. In current talks with my mortgage broker (same guy i used initially) and essentially I can get a rate of 3.25% on a cash out refi. Pull almost 50k cash out of the house while still retaining over 20% equity which means I can drop the PMI.

Because of the difference in the mortgage rate plus dropping the PMI, my monthly payment will drop about $250 per month despite having a larger mortgage balance. Even a reset of my mortgage going back to 30 years fixed and the fees for closing won't even be close to the amount of $$$ I'll save over the rest of the term with a rate almost a full point lower than I'm currently locked in at.

Sounds like a win win to my ears. Aside from the fact that I could actually use the money and plan to move forward regardless, am I missing something here?
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      03-10-2020, 01:26 PM   #62
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My mortgage is up for renewal this September. I hope to make it my last one.

My 5 yr rate now is 2.79%. I hope to be able to find a 5yr term close to this by then. With the markets crapping, rates may get down there again.
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      03-10-2020, 01:36 PM   #63
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Quote:
Originally Posted by Savageenterprise View Post
I locked in at 4.125% on my mortgage back in July of 17' which was a fantastic rate at the time. Unfortunately, I had to/have been paying PMI of $100 per month since we did not have 20% to put down on the house due to the fact we needed a lot of cash to do some renovations.

Because home values have risen tremendously, not to mention all the work I've put into my house, my home is now worth much more than I paid. In current talks with my mortgage broker (same guy i used initially) and essentially I can get a rate of 3.25% on a cash out refi. Pull almost 50k cash out of the house while still retaining over 20% equity which means I can drop the PMI.

Because of the difference in the mortgage rate plus dropping the PMI, my monthly payment will drop about $250 per month despite having a larger mortgage balance. Even a reset of my mortgage going back to 30 years fixed and the fees for closing won't even be close to the amount of $$$ I'll save over the rest of the term with a rate almost a full point lower than I'm currently locked in at.

Sounds like a win win to my ears. Aside from the fact that I could actually use the money and plan to move forward regardless, am I missing something here?
Have you checked to see what it looks like if you don’t take the cash out and instead refi to a 15- or 20- year term?
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      03-10-2020, 01:41 PM   #64
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Why are some of you wanting to refinance?

-lower monthly?
-cash out some equity?
-pay off loan faster?
-lower interest?
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      03-10-2020, 01:46 PM   #65
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Originally Posted by KennyFSU View Post
Why are some of you wanting to refinance?

-lower monthly?
-cash out some equity?
-pay off loan faster?
I would refi if aggregate interest savings exceeded cost and PITA to refi. Not the case for us right now.

I'm not a fan of pulling cash out and think anyone with a 30 year mortgage should be motivated to shorten to 15- or 20-year term if they can do it.
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      03-10-2020, 01:51 PM   #66
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Originally Posted by KennyFSU View Post
Why are some of you wanting to refinance?

-lower monthly?
-cash out some equity?
-pay off loan faster?
-lower interest?
Yes.
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