We indeed closed the Friday before labor day. Holiday weekend plus Dorian made it interesting, but we got it done. 3.0% 15 yr. Could have taken 2.8%. But the 3.0% option covered a huge chunk of closing costs. Pretty stoked.
Best Posts in Thread: Mortgage rates
Appraisal came back WAY higher than even my estimate on the application. Lack of mid-to-higher end inventory in this area has really driven up prices. So recent comps are shockingly ridiculous. For a few seconds, it almost tempted me to take some money out.
Additionally, the institution I am dealing with does not require escrow. Which I love and have had that on a previous mortgage in my life. I'll be able to escrow myself and invest that money as I see fit over the year.
At this point, should close within 10 days.
@BMF you hit the nail on the head and I have been saying it for years, but the loud mouths on the blower scream every day about how historically low mortgage rates are and you should buy any house and pay any price. Factually it is correct that mortgage rates are historically low, but here is the rub that you mentioned. 99% of the first time home buyers think any mortgage rate above 4% is high and 5% is insane. Over the last 10 years the 30 yr. mortgage rate has gone above 5% only a few days. So all these 20, 30 and 40 year olds say "SHYT" I could have had a 3% mortgage and now it is 4.5%. That is a 50% increase (yes I know it is only 150 basis points). I was a kid when mortgage rates were 14%. My first home, rates were 7.5%. But the majority of people have only known 15 and 30 year mortgages between 2.5% and 4%. Telling them them that 5%-6% mortgage rates is a steal is false. To them that is a very high rate and to them it IS a high rate. The blowhards need to stop with the historically all time low BS.
You know what you are doing. You don;t need any help. Best of luck with finding something you want and like. Remember this. The home you live in is a "lifestyle" investment. The rental (2nd) home is a "financial" investment.
Just refinanced home. Went from 4.75 to 3.5. Both 30-year fixed.
My plan is to essentially take the monthly savings of almost $400/month and put it into investments. Minimum payments for 30-years on home actually will cost me another $20K or so then having kept original loan going, but long term thinking is that the invested money of almost $5000 a year will net me over that interest loss when all said and done.
Am I crazy or on the right track, keeping in mind I’m in my mid-30s?
I'll take a stab at the comparison.
$200,000 mortgage, 4% interest, 30 years.
That is $954 per month payment. $143,739 in total interest paid over the life of the loan.
If you paid $100 extra each month, the payment would be $1054. The loan would be paid off in 25 years and with $116,702 in total interest paid.
So, is it fair to say that you equivocally (or effectively, of kinda-like, or more or less) just paid a 30 year mortgage at a rate of 3.35%? (A 30yr on $200,0000 that has $116,702 in interest paid has a rate of 3.35%.)
Really who gives a shiit how it makes sense in your head. Bottom line is you saved $27,037 in interest over the life of the loan.
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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!!!!
Also, while in many cases paying off a mortgage may make sense, if it is a very low rate it often doesnt. It always makes sense to refi, if the numbers work, but I'd only pay off a low rate mortgage if I were approaching retirement and I were very liquid, sitting on a bunch of cash or short term equivalents.
I would almost always do these before paying off a low rate mortgage:
- see if refi makes sense
- max out all 401k, individual IRAS (Roth or traditional)
- max any HSA opportunity
- if less than 40, maybe even 50, open a taxable investment account.
- make sure I have a large cash reserve, at least 6 months of income.
I understand paying off mortgages makes people "feel good". But I'd prefer to have the liquidity a govt subsidized FIXED low interest loan provides.
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.
Still as I told my stepson a few month's back when he bought, it's better to pay to buy than to rent as houses in the 1400-1800sqt are starting to rent for $1600-2000 monthly.
I do not really think housing has been in a funk, I think that prices are just too high for the average person. It is why I think that another tick down in mortgage rates is fool's gold for most people b/c almost everyone is only buying a monthly payment, they are not truly "buying" a home. They only care about the max they can afford. and just like when mortgage rates breached 5% in 2018 and housing truly died, it will happen again if rates approach 5% again. those buying at elevated prices will see just how buying that monthly payment can be dangerous if they go to sell b/c they need more space, etc. I would only recommend re-fiing the amount that you owe, as opposed to purchasing the max you can afford. If you are buying within your means and you plan to stay, then I understand. otherwise, these low mortgage rates can be a big problem down the road.