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Breaking even before year 27 is one thing, breaking even in year 4 is something totally different (especially with an 8 month old at home). That around where I'd like my break even to be if possible, which I don't think it is due to closing costs.
Hard to tell without actual numbers to crunch. There are also options on no closing costs (rates are slightly higher than what you otherwise can get) but with you being in long term- I would urge towards paying the closing costs and getting the lower rate.
So hard to keep a poker face with this guy.
Some people can't get out of their own way. It's frustrating in all areas of life. Try to help those you can.Customer comes in. A guy I spent a lot of time discussing his situation and his options a couple of months back. Comes in today to do a few things among them get a check for his closing which is tomorrow and the loan from another bank. He then says to me that he wishes that he had gotten more financial advice before doing what he is doing (selling his old place and buying a new one). He then says he wishes he looked into whether he could have kept the old one and bought the new one (something I actually brought up to him as a possibility and would have been able to tell him if he could or not). Then continues to tell me how he passed a number of other branches to come here because I give him good advice. Also, it sounds like the rate he got was higher than what I would have been able to get him. I asked him why he went with the other bank and he basically said the realtor referred him to Wells Fargo and they could do VA (which I told him already we could too).
exactly this. with a 3.25% mortgage I just don't see the need to pay it off early. and if we did, why not just pay more each month?
Or just make extra principle payments. (same thing)Grace Under Pressure said:
What he said. Exactly actually.FUBAR said:
And you forgot to add with the tax write off the effective rate paid is even lower.Walking Boot said:
Shop around. Rates can always change. Bank A may have the best rate yesterday and today Bank B may and then tomorrow it is Bank C. You can check with the banks you deal with now. Credit unions are usually a good place to check too. A mortgage broker can often beat all and the ones around these days tend to be better than they use to but there is still a little more 'risk' in getting a mortgage through a broker unless you know your stuff. Online as well but I have had mixed feedback from customers that have went that route- not sure I would personally do that.
It really is.
Same thing of course. But bi-weekly method makes that extra annual principle payment feel painless. Of course, if 3000 a month isn't the same as 1500 every two weeks to someone, then it probably isn't for them. But it chops off ~4 years from a 30 year fixed, by doing essentially nothing, if set up from Day 1. YMMV. Depends on an entire financial outlook. I'm sure some guys are "investing the difference", my guess is that money is usually spent on consumerism.
Beat me to it.FUBAR said:
At 3.25% you are good. You are not going to find something sub 3% on a 10 year fixed right now. Going from 3.25 to 3.125% on a 10 yr is not really going to be worth it IMO
Drives me crazy seeing rates go lower. I have about 10-11 years left on a 15 at 3.25%. Figure it's easier to just pay extra every month than go through the trouble of a refi.
It really is a regional thing because there are different costs associated with different areas. As we talked about in PM, the amount you mentioned seemed high to me but then again it could be right on the dot for your area.
The biggest closing costs will be escrow setup (will be same everywhere--just pre-funding your own escrow account), and title search and title insurance. Title insurance will vary based on the size of your mortgage and most states regulate that maximum amount, so you aren't really getting soaked.
The escrow (if you are doing escrow) should not be considered in as much as deciding lenders as that will not change from lender to lender. Also, that cost will be offset by roughly the same amount in the balance in your escrow account that will be closing from the old loan (assuming you had one on that as well). Some lenders and often brokers will add in more fees to make it more lucrative to them. Regionally- there are also taxes and other regional specifics that can change the numbers greatly from one region to the next.
We get paid monthly and budget on a monthly basis, the month with 3 payments would be big. But adding in $100 to each monthly payment would be more manageable. (if we wanted to pay the mortgage quicker)
I was about to ask where are you finding a rate lower than 3.25, but the 15 year is key. I was very tempted to do a 2.75% 15 year fixed but opted for the slightly higher 30 year. $850 difference each month was big for us even if the long term payment was less.
Drives me crazy seeing rates go lower. I have about 10-11 years left on a 15 at 3.25%. Figure it's easier to just pay extra every month than go through the trouble of a refi.
I always tell me customers that if they want or need escrow to expect to need to fund which they will get roughly the same amount back later from the old escrow but there will be about a month or so lag on that. But in terms of deciding whether to refi or not- escrow should not really be a part of the discussion*. It will always be a "wash" because your taxes and insurance will not change and all lenders fund the escrow account with roughly the same 'padding'.
At 2.875% I'm definitely holding mine until term. It is the safest leverage out there.
Exactly. Plus, if you don't live there for the full extent of the loan (30 yrs), then it makes even less sense. These sub 4% mortgages are gifts.
that's the best conventional rate we were offered too with no points. (VA is better for once)
Reasons to refi: Stop throwing away money.
OK, so now I feel dumb. Should I start by just calling the company currently servicing the largest loan (Chase)? I guess I should just follow the advice from this post below. That would mean I should at least contact my current bank, the current mortgage holder, and maybe ask my finance guy if he knows someone I should talk to?
I wouldn't turn it down, but I also wouldn't put the bulk of my money there. When the market historically averages over 8% in the long term, it's -EV to put it there just because it's safe. Now, if I were 5 yrs away from retirement, then yeah, I'd probably switch a higher % into that kind of account. But with almost 20 yrs away from that point, I'll put my money where it's very likely going to make significantly more.
I'd let some of the others chime in that can answer this a little bit better, but my understanding is that a 30 yr, while paying more interest, is a better bet because rates are so low. You lose some of that advantage by cutting your payment period in half. That said, if you want to remove the burden of a mortgage and can afford the 15 yr, then it's still a good option.
Like gm said, I wouldn't put the bulk of my retirement account there but would my short term funds. I also don't know that I'd take out a mortgage on a home I owned outright even at these rates.
15 vs 30 (or 10 or 20) is a trade off. One side is reducing cost/cash flow (the shorter terms) and the other side is increasing cash flow/cost (the longer terms). What makes sense depends on your situation, goals and priorities. No one size fits all answer.
How much lower is the loan rate with the lower year mortgage? Also if you don't want to commit to higher payments you can just get an amortization schedule and make the next principal payment and still pay it off in the same amount of time. Most people don't have the willpower to do so though.
