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  1. #176
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    Quote Originally Posted by oftpiste View Post
    ^^I did that and was down to 4 years left. Then there was a divorce. Now have a new 30 with 4x the loan amount. Fuck.
    Ouch

  2. #177
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    Thanks for all the advice. Mainly just looking to reduce payments and rate to shift money to pay off higher interest student loan debt. Crazy that the govt and banks charge a higher rate for education than a home. Not struggling to make any payments or anything, just want to get rid of that student loan debt asap.

    Loan actually ends up being $50K cheaper just by reducing the rate even with the extended term. Would save $116K if we went 20 year, but paying off principle faster isn't the goal. As I said, we probably won't keep the house that much longer (5-10 yrs), and the equity in the house is already pretty substantial just from the local market increasing.

  3. #178
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    Quote Originally Posted by CascadeLuke View Post
    <snip> When the rates dropped the smart cats were going to 15 yr loans with just a hair higher payment, cutting 10 yrs of payments off. Now thatís winning
    5y left... 5 short years...


  4. #179
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    To the point about refinancing in order to get a lower rate on a 15-yr term-

    Run the numbers first on an amortization calculator online, and see if you would save enough to make the refi costs (to 15) worthwhile vs just prepaying the 30.

    I think a good route is to get a 30 yr fixed and make prepayments in order to reduce total interest paid. This keeps your monthly required payment at a lower 30 term, so if you have difficulties (eg job loss), you have flexibility to skip the prepayments for awhile.

    Mortgage debt at low interest rates should be the last thing you pay off, if you have other higher interest debt - credit cards, student loans, car loans - pay that first. Should also factor in your savings and investment plans in the mix too.

    /Chup's life coaching
    Quote Originally Posted by powder11 View Post
    if you have to resort to taking advice from the nitwits on this forum, then you're doomed.

  5. #180
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    Quote Originally Posted by El Chupacabra View Post
    To the point about refinancing in order to get a lower rate on a 15-yr term-

    Run the numbers first on an amortization calculator online, and see if you would save enough to make the refi costs (to 15) worthwhile vs just prepaying the 30.

    I think a good route is to get a 30 yr fixed and make prepayments in order to reduce total interest paid. This keeps your monthly required payment at a lower 30 term, so if you have difficulties (eg job loss), you have flexibility to skip the prepayments for awhile.

    Mortgage debt at low interest rates should be the last thing you pay off, if you have other higher interest debt - credit cards, student loans, car loans - pay that first. Should also factor in your savings and investment plans in the mix too.

    /Chup's life coaching
    My mortgage is 3.625% and I'm earning 3.2% in CDs through one of my credit unions. The >0.5% I'd earn by prepaying my mortgage just doesn't make sense at the moment. I like the idea of having a paid off house, but I'm more likely to do in on payment after saving up the entire mortgage balance.

    Say someone was to prepay aggressively on 15 year schedule with a 30 year mortgage- yes, they'd be able to save some money on interest, but if they ever got into serious financial difficulty (job loss during major economic downturn), their lower mortgage balance would do nothing to keep them afloat once they run out of savings. They wouldn't be able to access the equity in their house- good luck getting a refi or HELOC during a downturn when either housing prices have dropped or you are out of work.

    Alternatively, if one were to save cash in CD ladders (multiple CD's so that you can avoid fees for early withdrawal) and wait to pay off the mortgage until they can do it all at once they'd have much more security and liquidity. If the same scenario were to happen (job loss during major downturn), said person would have potentially hundred of thousand in cash reserves to keep them afloat and able to pay the mortgage until their income returns. Yes, it costs some money (delta between CD rate and mortgage rate) to have the liquidity, but the liquidity is really nice. When cash reserves are larger than the mortgage balance, you can pay off the entire house with one big payment. There is also a chance that by the time you have enough to pay off the house that interest rates for CDs would be more than your mortgage rate, in which case it wouldn't make sense to pay off the house yet.

  6. #181
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    ^^^ All very good points. I am not advocating prepayment above all else, certainly, but a paid off house is nice.
    Quote Originally Posted by powder11 View Post
    if you have to resort to taking advice from the nitwits on this forum, then you're doomed.

  7. #182
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    3.2% in CDs at a brick and mortar is impressive.

  8. #183
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    Quote Originally Posted by Ted Striker View Post
    3.2% in CDs at a brick and mortar is impressive.
    Navy Federal Credit Union. You usually have to have a military connection but back in the day they merged with a credit union where I had an account and I'm grandfathered in.

  9. #184
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    I'm actually a penfed member. I'll look into it, thanks.

  10. #185
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    Quote Originally Posted by Kevo View Post
    My mortgage is 3.625% and I'm earning 3.2% in CDs through one of my credit unions. The >0.5% I'd earn by prepaying my mortgage just doesn't make sense at the moment. I like the idea of having a paid off house, but I'm more likely to do in on payment after saving up the entire mortgage balance.

    Say someone was to prepay aggressively on 15 year schedule with a 30 year mortgage- yes, they'd be able to save some money on interest, but if they ever got into serious financial difficulty (job loss during major economic downturn), their lower mortgage balance would do nothing to keep them afloat once they run out of savings. They wouldn't be able to access the equity in their house- good luck getting a refi or HELOC during a downturn when either housing prices have dropped or you are out of work.

    Alternatively, if one were to save cash in CD ladders (multiple CD's so that you can avoid fees for early withdrawal) and wait to pay off the mortgage until they can do it all at once they'd have much more security and liquidity. If the same scenario were to happen (job loss during major downturn), said person would have potentially hundred of thousand in cash reserves to keep them afloat and able to pay the mortgage until their income returns. Yes, it costs some money (delta between CD rate and mortgage rate) to have the liquidity, but the liquidity is really nice. When cash reserves are larger than the mortgage balance, you can pay off the entire house with one big payment. There is also a chance that by the time you have enough to pay off the house that interest rates for CDs would be more than your mortgage rate, in which case it wouldn't make sense to pay off the house yet.
    A paid off house is more a mental/opportunity thing than a pure financial play.

    If you get shit canned it is a lot easier to make it without floating a thousand or three mortgage.

    Your job sucks? You now can quit that much easier without the monthly mortgage nut.

    Want to start a business, trust me, it is easier with no mortgage.

    It is more about freedom than "in 20 years I will have x amount more in the bank", but I suspect for most folks who have normal spending habits (aka not 100% disciplined every transaction) if you pay off your mortgage early you would still come out ahead vs. the hypothetical invest the difference argument. Human nature and all.

    I do tend to agree though that it is a better play to go with a 30 year and pay it early vs a 15. The flexibility is nice and by paying early you are effectively getting a better rate anyways.
    Live Free or Die

  11. #186
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    I went with the lowest payment variable rate 30yr amortisation mortgage I could get at the time because mom was 86, not taking trips to vegas and computer illiterate (it runs in the family eh) SO there was no point in paying off early when I could pay the minimum mortgage, spend the rest on women/booze/dope/skis, wait a bit and pay it off in one swell foop

    even without an inheritance the suite had me setup pretty good
    Lee Lau - xxx-er is the laziest Asian canuck I know

  12. #187
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    Quote Originally Posted by AdironRider View Post
    A paid off house is more a mental/opportunity thing than a pure financial play.

    If you get shit canned it is a lot easier to make it without floating a thousand or three mortgage.

    Your job sucks? You now can quit that much easier without the monthly mortgage nut.

    Want to start a business, trust me, it is easier with no mortgage.

    It is more about freedom than "in 20 years I will have x amount more in the bank", but I suspect for most folks who have normal spending habits (aka not 100% disciplined every transaction) if you pay off your mortgage early you would still come out ahead vs. the hypothetical invest the difference argument. Human nature and all.

    I do tend to agree though that it is a better play to go with a 30 year and pay it early vs a 15. The flexibility is nice and by paying early you are effectively getting a better rate anyways.
    I agree with you about the idea of having a paid off house, I but I disagree with the idea of prepaying the mortgage. The summation of my position is to save up your mortgage balance on the side while making regular payments, and then to pay off the house in one fell swoop once you have enough money saved. Doing so prevents you from being screwed if you have partially paid down the mortgage and then run into financial trouble.

  13. #188
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    Quote Originally Posted by Kevo View Post
    I agree with you about the idea of having a paid off house, I but I disagree with the idea of prepaying the mortgage. The summation of my position is to save up your mortgage balance on the side while making regular payments, and then to pay off the house in one fell swoop once you have enough money saved. Doing so prevents you from being screwed if you have partially paid down the mortgage and then run into financial trouble.
    You are probably the only person I know or have heard of that would put hundreds of thousands into a cd ladder. I get you want to have basically zero risk on the thing, but you get a guaranteed return by paying the mortgage down. If you are going to do cd's you might as well just invest elsewhere and increase the risk. Very few people have access to 3.2% cds and I guarantee you, even after the past 10 years or so of low rates, that the vast majority of folks aren't at 3.65% mortgages either. In effect, the spread is higher than the .4 you have.

    In general, I don't think many humans have the financial fortitude to not cash those cd's (or investments also) out over that couple decade timeframe. Paying the mortgage early directly is like a 401k in the sense that it forces a long term play, vs the discipline required for a cd ladder or investments.
    Live Free or Die

  14. #189
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    Quote Originally Posted by Kevo View Post
    Say someone was to prepay aggressively on 15 year schedule with a 30 year mortgage- yes, they'd be able to save some money on interest, but if they ever got into serious financial difficulty (job loss during major economic downturn), their lower mortgage balance would do nothing to keep them afloat once they run out of savings. They wouldn't be able to access the equity in their house- good luck getting a refi or HELOC during a downturn when either housing prices have dropped or you are out of work.
    If you wanted a cushion, you could get a heloc now while times are good. so if you needed liquidity for job loss, medical, whatever .. you could get it there at a known and theoretically decent rate (I did this).

    Quote Originally Posted by El Chupacabra View Post
    To the point about refinancing in order to get a lower rate on a 15-yr term-

    <snip>

    I think a good route is to get a 30 yr fixed and make prepayments in order to reduce total interest paid. This keeps your monthly required payment at a lower 30 term, so if you have difficulties (eg job loss), you have flexibility to skip the prepayments for awhile.

    /Chup's life coaching
    this. Add in bi-monthly payments. Ability to scale it back in the lean months has saved my bacon.

    Sure, a guy could make a little more in the market, and keep the money more liquid. and at least in my world, a lack of liquidity is ok there - I can't take it out for booze and fast women (reference Adiron's financial fortitude observation).

    no mortgage equals freedom. I can't wait to get there.

  15. #190
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    Quote Originally Posted by AdironRider View Post
    <snip> Very few people have access to 3.2% cds
    Yup. Rates for CD's are pretty shitty.

  16. #191
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    Quote Originally Posted by AdironRider View Post
    Very few people have access to 3.2% cds.
    Just checked, my CU currently maxes out at 2.6% for a 60-month certificate. Man, remember when fully-liquid FDIC-insured online savings accounts from places like ING Direct were yielding 4.5%?

  17. #192
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    Quote Originally Posted by MiddleOfNight View Post
    If you wanted a cushion, you could get a heloc now while times are good. so if you needed liquidity for job loss, medical, whatever .. you could get it there at a known and theoretically decent rate (I did this).

    <snipped quote about prepaying a 30 instead of committing to a 15>

    this. Add in bi-monthly payments.
    HELOCs can be called by the lender, and anecdotally, I have read that this occurred during the financial crisis years. Something to consider, anyway.

    Re: bi-monthly payments -- for anyone looking to prepay a little on a mortgage, it is worth playing around with amortization calculators -- paying the equivalent of 1 extra payment per year on a 30-yr fixed has the effect of reducing that 30 yr timeframe to something like 22 years. It doesn't have to be made all in one payment per year -- we did something like $200 per month extra, and had it automatically withdrawn from checking at the same time the monthly principle + interest payment was due.

    There are a lot of companies that will set up a "bi monthly" payment schedule for you, and charge you for that service -- it is not at all necessary. You can set it up yourself as part of your automatic payments.
    Quote Originally Posted by powder11 View Post
    if you have to resort to taking advice from the nitwits on this forum, then you're doomed.

  18. #193
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    Quote Originally Posted by El Chupacabra View Post
    HELOCs can be called by the lender, and anecdotally, I have read that this occurred during the financial crisis years.
    They sure can - we had one closed in 2010.

  19. #194
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    Quote Originally Posted by El Chupacabra View Post
    HELOCs can be called by the lender, and anecdotally, I have read that this occurred during the financial crisis years. Something to consider, anyway.
    ah . Ha that's what I get for thinking! This hadn't occurred to me.
    At least it still might help with liquid needs if I got fired, hurt, or needed bail (absent a recession).

    Quote Originally Posted by El Chupacabra View Post
    Re: bi-monthly payments -- for anyone looking to prepay a little on a mortgage, it is worth playing around with amortization calculators -- paying the equivalent of 1 extra payment per year on a 30-yr fixed has the effect of reducing that 30 yr timeframe to something like 22 years. It doesn't have to be made all in one payment per year -- we did something like $200 per month extra, and had it automatically withdrawn from checking at the same time the monthly principle + interest payment was due.

    There are a lot of companies that will set up a "bi monthly" payment schedule for you, and charge you for that service -- it is not at all necessary. You can set it up yourself as part of your automatic payments.
    yea anecdotally, I always thought bi-monthly payments plus one more additional principle payment per year made a 30 yr note 20. No clue where I got that. I have a hard time navigating those calculators to fit my specific situation.

    I know the rich get richer by really managing and leveraging the interest on everything owned and owed, but in humble situation .. the amount of time and energy it takes to manage and maintain, plus the likelihood I'd screw it up .. It'll only save me a few bucks in the long run. It's bad to say but it's worth it for me to set up on autopilot. Automating my financial discipline has done me wonders.

  20. #195
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    Real Estate Question

    In 2015, I 1031íd all my rentals into one really nice one in Snowmass, that was still slightly depressed.
    I did a 30yr jumbo @ 3.5% and we pay automatically biweekly. After two years of renting,I moved in and made it my principal.

    I took the mil and spun the wheel on black, AAPL.

  21. #196
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    Quote Originally Posted by Shredhead View Post
    In 2015, I 1031’d all my rentals into one really nice one in Snowmass, that was still slightly depressed.
    I did a 30yr jumbo @ 3.5% and we pay automatically biweekly. After two years of renting,I moved in and made it my principal.

    I took the mil and spun the wheel on black, AAPL.
    Smart move. I have suggested we do a similar thing with our primary which is worth close to $2M today. Rent it out for 2 years and then 1031 the proceeds into other rentals (wink wink) before eventually using them for ourselves. Mrs L2S told me to fuck off Women...
    Quote Originally Posted by leroy jenkins View Post
    I think you'd have an easier time understanding people if you remembered that 80% of them are fucking morons.
    That is why I like dogs, more than most people.

  22. #197
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    Quote Originally Posted by liv2ski View Post
    Smart move. I have suggested we do a similar thing with our primary which is worth close to $2M today. Rent it out for 2 years and then 1031 the proceeds into other rentals (wink wink) before eventually using them for ourselves. Mrs L2S told me to fuck off Women...
    Why bother. If you are retired you can arrange income to have zero cap gains. If not, why not pay your fair share instead of grifting.

  23. #198
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    Grifting? Really? You're such a cunt. Being that you're the unabashed Capitalist here, I am surprised you don't approve of the shrewd allocation of assets. Regardless
    Quote Originally Posted by leroy jenkins View Post
    I think you'd have an easier time understanding people if you remembered that 80% of them are fucking morons.
    That is why I like dogs, more than most people.

  24. #199
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    Quote Originally Posted by El Chupacabra View Post
    ^^^ All very good points. I am not advocating prepayment above all else, certainly, but a paid off house is nice.
    A paid off house is very nice when you send kids off to college. It's essential when you retire.

  25. #200
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    Quote Originally Posted by AdironRider View Post
    You are probably the only person I know or have heard of that would put hundreds of thousands into a cd ladder.

    In general, I don't think many humans have the financial fortitude to not cash those cd's (or investments also) out over that couple decade timeframe. Paying the mortgage early directly is like a 401k in the sense that it forces a long term play, vs the discipline required for a cd ladder or investments.
    I'm admittedly weird when it comes to this.

    I've been bored recently and have been running numbers on whether to buy a second home in the mountains with some of the money. So far the math hasn't worked out on any of the properties I've looked at, but still something I'm thinking about.

    Quote Originally Posted by old goat View Post
    A paid off house is very nice when you send kids off to college. It's essential when you retire.
    Seems like mortgages can be a great inflation hedge in retirement. I know several people who are using them as such.

    Also, this site is good for shopping CD rates- https://www.depositaccounts.com/cd/5-year-cd-rates.html

    Rates change all the time and there are often promo rates around holidays. Navy Federal has their best rates during tax season, when they try to encourage people to put some tax return money away. Also, sometimes short term or odd term (17 months for example) CDs have the best rates.

    You can join many credit unions with a one time $5 donation to a random charity they are affiliated with. For example, I'm a member of State Department Federal Credit Union even though I have no connection to the state department. I'm also a member of PenFed even though I'm not affiliated with the military.

    SDFCU gave me a 1.2% APR 36 month auto loan when I bought my truck a couple years ago. I had the cash, but I put it into CDs and have been realizing the delta between the APR of the loan and the APY of my CDs since. It's boring and conservative, but whatever. Still better than financing a truck when you don't have the money to pay cash.

    In retrospect I could have invested that cash in $VTI or something, but I'm already automatically investing thousands into the stock market every month anyway.

    All that said, my conservative style has no doubt cost me a lot of gains I could have realized by taking on more leverage in the RE market instead of waiting to buy with a bigger down payment or by investing more into the stock market instead of doing the CD ladder thing. All depends on personal preferences, etc.

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