Mortgage rates

[bradgator2]

Congrats and best of luck. That is the way to do it. Don;t take money out but I love how that 6 figure savings looks over time. I am not telling you to wait, I promise. But my prediction is that the 15 yr. mortgage will approach the lows of around 2.75 that the were about 6 or seven yrs. ago. With the 10 yr. Treasury easily breaking 2% on the downside today, I am seeing it challenging its all time low yield of 1.35% sometime in the future. With over 16 trillion dollars of sovereign debt now with negative yields I have a hard time not seeing our treasuries going near zero. The only caveat is the size of debt we have to issue to fund the deficits (thanx to those DC idiots), but with negative yields worldwide I see plenty of foreign governments buying our paper just to get some type of yield.

Cool, thanks for the input.

For my numbers, 3.25 vs 2.75 would be $90/month better and $15,000 savings over the 15 years. Always an interesting struggle of pull the trigger or wait.

 

[FireFoley]

Cool, thanks for the input.

For my numbers, 3.25 vs 2.75 would be $90/month better and $15,000 savings over the 15 years. Always an interesting struggle of pull the trigger or wait.

With over 25 years in the financial markets, there is one thing I can say factually. It is impossible to perfectly time any market and if you do most of it is luck. but with due diligence like you have put it, you can make a sound financial decision. I leave you with this. No one ever went broke taking a profit or doing something that saves money!

 

[Concrete Helmet]

For my numbers, 3.25 vs 2.75 would be $90/month better and $15,000 savings over the 15 years.

Brad were already closing 2.75% 15 years from our local lenders(credit unions) with 1 point...we started seeing them last week.

 

[Concrete Helmet]

We ended up with 233 closings for July and it's getting busier this month...were already 60 searches behind.....I know one should never complain about being too busy but damned we cant even stop long enough to hire more help... Purchases are still down slightly as inventory remains tight

 

[Gator By Marriage]

With over 25 years in the financial markets, there is one thing I can say factually. It is impossible to perfectly time any market and if you do most of it is luck. but with due diligence like you have put it, you can make a sound financial decision. I leave you with this. No one ever went broke taking a profit or doing something that saves money!

When I was first learning about investing, I heard a very wise man say that anyone can be right once, but the reason it's so hard to perfectly time the market is you have to be right twice. Not a lot has stuck with me over they years as much as that one did.

 

[bradgator2]

Brad were already closing 2.75% 15 years from our local lenders(credit unions) with 1 point...we started seeing them last week.

Alright, almost there. Locked in today at 3.00%. They also threw in $1500. I had 2 options for it: 1) cover some closing costs or 2) use it to buy down the rate to 2.80%.

I chose option 1 simply to use less cash at closing. Option 2 would have dropped payment by roughly $40 a month and saved $6500 in total loan interest.

 

[FireFoley]

Alright, almost there. Locked in today at 3.00%. They also threw in $1500. I had 2 options for it: 1) cover some closing costs or 2) use it to buy down the rate to 2.80%.

I chose option 1 simply to use less cash at closing. Option 2 would have dropped payment by roughly $40 a month and saved $6500 in total loan interest.

Well done. Now instead of making double payments you can go back to making your monthly payment, still save a ton over the life of the loan and perhaps take that extra money monthly and invest it or put it under the mattress. But stay the course. But if you do invest it please no annuities or fee charging mutual funds. I loathe both annuities and mutual funds, but if you don;t have the time to do your own research and work, please just go into a no fee, total market mutual fund. Again, way to go and enjoy YOUR money!!!!

 

[Concrete Helmet]

Alright, almost there. Locked in today at 3.00%. They also threw in $1500. I had 2 options for it: 1) cover some closing costs or 2) use it to buy down the rate to 2.80%.

I chose option 1 simply to use less cash at closing. Option 2 would have dropped payment by roughly $40 a month and saved $6500 in total loan interest.

Well done...you're good and if you want that 2.80 just throw in an extra 25-50 bucks or so every month. I look at interest(mortgage) as rent on money(time paying)….I pay an extra 140 each a month on my investment loans which are 3.75% and throw in my tax return. In less than 2.5 years I've paid down 1/3 of the balances....so in my mind I'm only paying 2.50 for the rest of the terms.....but that's my math not scientific.

 

[Bushmaster]

Whats the 30 year rate going for these days on a second home? I have been quoted 3.875 from a local bank and I think I can squeeze a little more.

I can make it a primary home if need be.

 

[Politigator]

Well done...you're good and if you want that 2.80 just throw in an extra 25-50 bucks or so every month. I look at interest(mortgage) as rent on money(time paying)….I pay an extra 140 each a month on my investment loans which are 3.75% and throw in my tax return. In less than 2.5 years I've paid down 1/3 of the balances....so in my mind I'm only paying 2.50 for the rest of the terms.....but that's my math not scientific.

Paying a loan down faster doesn't lower your interest rate. It lowers your total interest payments.

 

[Concrete Helmet]

Paying a loan down faster doesn't lower your interest rate. It lowers your total interest payments.

You are leasing or renting the money which is tied to a time table,,,,in essence you CAN buy down your interest rate.

 

[Politigator]

You are leasing or renting the money which is tied to a time table,,,,in essence you CAN buy down your interest rate.

No. You are just lowering your principal, which results in less interest.

 

[Concrete Helmet]

which results in less interest.

And conversely lowers your rate....

 

[Politigator]

And conversely lowers your rate....

And conversely lowers your rate....

Interest rate = interest / principal. It doesn't change.

 

[Concrete Helmet]

Interest rate = interest / principal. It doesn't change.

you are effectively "renting" money when you take out mortgage....check
when you shorten the "lease" you decrease the total amount paid...check
take the beginning interest rate out of the equation then run the amortization table backs from a shortened equation vs full equation....you can plug any numbers in you want it won't matter BUT you will have paid a lower rate.

 

[Politigator]

you are effectively "renting" money when you take out mortgage....check
when you shorten the "lease" you decrease the total amount paid...check
take the beginning interest rate out of the equation then run the amortization table backs from a shortened equation vs full equation....you can plug any numbers in you want it won't matter BUT you will have paid a lower rate.

No. If you pay extra payments, your remaining principal goes down. More of your future payments go to principal instead of interest. The result is you pay off your loan faster. But your rate doesn't go down. Your average balance goes down.

This is financial 101.

 

[Concrete Helmet]

No. If you pay extra payments, your remaining principal goes down. More of your future payments go to principal instead of interest. The result is you pay off your loan faster. But your rate doesn't go down. Your average balance goes down.

This is financial 101.

Yes and no.... You have to start off with a Term, Rate and Sum. Interest is RENT on the sum. If the rent(term) is shortened you pay LESS interest so at the end of payments you HAVE lowered the amount of rent. Math 101
100K over 30 years at ? rate=total
100K over 30 years paid in full in 12 years is a lot less.....AT THE END OF THE LOAN YOU HAVE LOWERED THE RENT. DO THE MATH FOR YOURSELF. You cannot come to the same total....You will be effectively lowering your interest rate as you do so.

 

[NVGator]

Two benefits of making extra payments
As you may know, making extra payments on your mortgage does NOT lower your monthly payment. Additional payments to principal just help to shorten the length of the loan (since your payment is fixed). Of course, paying additional principal does, in fact, save money since you’d effectively shorten the loan term and stop making payments sooner than if you were to make the minimum payment. However, that only happens after a certain (and still long) period of time.

“If you have an extra mortgage payment plan that will end your mortgage within a timeframe that lets you enjoy 5 years or longer of mortgage-free living, that makes more sense,” says Sullivan.

So how can making extra principal payments benefit you?

1. Save on interest
Since your interest is calculated on your remaining loan balance, making additional principal payments every month will significantly reduce your interest payments over the life of the loan. By paying more principal each month, you incrementally lower the principal balance and interest charged on it.

Peter Tedstrom of Brown & Tedstrom Wealth Management explains, “if the mortgage has a variable rate, we recommend either paying extra each month or refinancing while rates are still low.”

Unlike fixed-rate mortgages, ARM loans will reset at a predetermined length of time depending on the loan program. Paying down more principal increases the amount of equity and saves on interest before the reset period. This also increases the chances of refinancing out of a variable rate loan as the equity in the home rises.

2. Shorten the loan term
Making additional principal payments will also shorten the length of your mortgage term and allow you to build equity faster. Because your balance is being paid down faster, you’ll have fewer total payments to make, in-turn leading to more savings.

(EXAMPLE: Consider your loan amount is $300,000 with an interest rate of 4% and a 30-year loan term. If you pay $150 additional toward the principal each month, you can expect to save $40,282 and pay off your mortgage almost 5 years earlier.)

 

[FireFoley]

Well as we banter about how low mortgage rates are or may be and how to pay the least amount, I think the solution is to move to Denmark and buying a house. A 20yr mortgage in Denmark can be had with 0% interest rate.

 

[GatorInGeorgia]

Well done...you're good and if you want that 2.80 just throw in an extra 25-50 bucks or so every month. I look at interest(mortgage) as rent on money(time paying)….I pay an extra 140 each a month on my investment loans which are 3.75% and throw in my tax return. In less than 2.5 years I've paid down 1/3 of the balances....so in my mind I'm only paying 2.50 for the rest of the terms.....but that's my math not scientific.

Paying a loan down faster doesn't lower your interest rate. It lowers your total interest payments.

Concrete Helmet is basically saying that making extra pmts. lowers the total interest paid, which would equal the same amount of total interest paid on a lower interest rate loan paid according to the schedule, thereby “lowering” your true interest rate. I think you’re splitting hairs with him.