Best Posts in Thread: Mortgage rates

  1. bradgator2

    bradgator2 Internet Bully
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    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.
     
    • bradgator2

      bradgator2 Internet Bully
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      Rolling along.

      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. :yes:
       
      • FireFoley

        FireFoley Senior Member
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        @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.
         
        • GatorInGeorgia

          GatorInGeorgia Senior Member
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          Here’s a thought. You could apply all the savings to pre-paying the mortgage and consider that the “bond fund” portion of your investment portfolio. For example, let’s say your investment profile says you should have 10% of your portfolio in fixed income/cash. Throw the extra money into your home and then allocate your investments so that you put more money into aggressive investments and the fixed income portion is reduced/eliminated. It could be the best of both worlds where you’re getting a pretty good return on your prepayment (relative to bonds) and you’re getting added security of paying the house off sooner. You know what they say...you can’t sleep comfortably under just a stock or bond certificate but you can sleep comfortably in a free & clear home.
           
          • ExecutiveGator

            ExecutiveGator Paragraphs are great tools. Use them.
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            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?
             
            • bradgator2

              bradgator2 Internet Bully
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              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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              • FireFoley

                FireFoley Senior Member
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                :highfive:
                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!!!!
                 
                • FireFoley

                  FireFoley Senior Member
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                  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!
                   
                  • FireFoley

                    FireFoley Senior Member
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                    I am not really sure as far as new applicants go, probably not very many. But to broaden it, I do not think that a large majority of people, any age, have credit scores above 700. But I am not a good person to talk in depth on the topic as I don;t do credit and have not had a significant debt in almost 20 years. But knowing that a good amount of people do not own anything anymore (meaning they have a home mortgage, lease a car, boat payment, etc. etc. etc. etc.), I am not sure if that helps or hurts a credit score. And I am not judging them, but let's be honest that leasing and free money for all has not necessarily been a good thing for many people living within their means. And yes I have friends that have a large home, lease 2+ expensive cars and other toys and tell me they own all that stuff. I ask if they are making payments on it and when the answer is yes I tell them they don't own shyt!
                     
                    • Detroitgator

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                      You mean there are people that have credit scores below 700?!?!?! If so, I will now add them to the category of people that fly economy/coach... or what I refer to as, "the others!" ;)
                       
                      • FireFoley

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                        Well whichever you decide you do not have to stay on that path each month. There is absolutely nothing wrong with getting the home paid off asap especially b/c those are large numbers and especially if you are staying in the home for a long time. The part about the investing the money offers many choices. You are young enough to be a little more risky, however since this is money that was derived from a refi, I understand that you want to protect it at least and earn something if possible. There are online savings accts and CD's that yield 2+% but I know that is not what you had in mind. There are dividend stocks and funds that will yield you higher than 3.5% but then you run the risk of the stocks/funds going down in price. I don;t think there is a wrong answer as paying off any debt is never a bad thing but having your money make you money is good also. My only advice is to stick with what you know and what you brings you the most comfort. congrats again.
                         
                        • FireFoley

                          FireFoley Senior Member
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                          Congrats. I love stories like this, but since you went back into a 30yr., you noted the increased cost. I like your idea of investing the approx. 5K a year, but have you also considered applying the extra 400/month or some amount toward the mortgage to pay it off early? Certainly not suggesting or telling you what to do, just making an observation.
                           
                          • Politigator

                            Politigator L-boy's Cousin
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                            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.
                             
                            • bradgator2

                              bradgator2 Internet Bully
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                              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

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                                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.
                                 
                                • Gator By Marriage

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                                  A realtor friend of mine who works in the NW ATL suburbs said the same thing about houses in the 200-400K range in her area.
                                   
                                  • Concrete Helmet

                                    Concrete Helmet Hook, Line, and Sinker
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                                    We saw a short period where our local lenders went to 5.0 and a little above. It had little effect on refi's, maybe down 10% for a month or 2. The biggest problem in our area is lack of affordable or starter houses, 200k-400k. If you're looking in this area in that price range you'll be looking for probably close to a year as one of our young employees and my stepson just found out......and as you mentioned you also run the risk of buying a overpriced house right now when things pull back.

                                    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.
                                     
                                    • FireFoley

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                                      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.
                                       

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