The Home Improvement Thread

Hmmm… I think I heard that one before

But where?

Financial gurus of the board,

So we planned to refinance at 2.625 but the lender is saying they will simply lower the rate to 2.625 and we then have no closing costs

So at that point one isn’t refinancing and the term of the loan would not extend

I think we are going to go with this

Keep in mind we are happy with our lender and aren’t going to refinance anywhere else

On the plus side we pay off loan earlier and save closing costs

The downside is our monthly payment  will still go down substantially but not as much as would be the case under a refi…about $175 less
Make sense?
Thoughts?

PS note my partner handles all this stuff.. I just tell her to refinance or what have u you! I am completely useless

  How does one negotiate that? We're sitting at 3.79% and the loan is in my wife's name (bought before we married) and she's kind of sitting on her hands about refinancing because she's not particularly versed in economic concepts. I've tried explaining inflation on several occasions for her to say, "as long as I can buy what I want I don't care". She also, for some reason wants to refi with Bank of America because she believes (because of one anecdote from a colleague) that they won't sell off our loan like ours has been sold three times in the past five years. So we sit at 3.79%. . .
  Oh and we're re-shingling half of our roof, cool, goodbye $3,000.00.   

Most of the savings on a refinance comes from extending your debt out to 30 years,  not from the difference in the interest rate.

Your offer is a no-brainer - do it immediately  - but you aren't going to see a dramatic reduction in monthly payments.

evilizac wrote:
  How does one negotiate that? We're sitting at 3.79% and the loan is in my wife's name (bought before we married) and she's kind of sitting on her hands about refinancing because she's not particularly versed in economic concepts. I've tried explaining inflation on several occasions for her to say, "as long as I can buy what I want I don't care". She also, for some reason wants to refi with Bank of America because she believes (because of one anecdote from a colleague) that they won't sell off our loan like ours has been sold three times in the past five years. So we sit at 3.79%. . .
  Oh and we're re-shingling half of our roof, cool, goodbye $3,000.00. 

Well we did all the paperwork for the refi and they sent us this letter very quickly with the offer to just lower rate

I don’t think we would have gotten offer without having done all the paperwork… not sure if this letter was sent because our application was strong or what

In this case it’s a well known credit union


If you are currently at 3.79 it’s a great time to refinance…

I didn’t think Bank of America was particularly great but I am fairly clueless

excontradiction wrote:
Most of the savings on a refinance comes from extending your debt out to 30 years,  not from the difference in the interest rate.

Your offer is a no-brainer - do it immediately  - but you aren't going to see a dramatic reduction in monthly payments.

Yes..well I think we will accept tomorrow but just wanted some thoughts

my understanding is we will be saving a few hundred $ a month but $175 or so less than with the refi

Just wrote:I just tell her to refinance or what have u you!

Overheard at the hutchold
Oh, honey, I'm going to take the trash out, can you refinance or what have u

Just wrote:
So we planned to refinance at 2.625 but the lender is saying they will simply lower the rate to 2.625 and we then have no closing costs

So at that point, one isn’t refinancing and the term of the loan would not extend

Funny, my lender did this too.  Although I think it was more like 2.85%
I was already locked in so there would be a penalty for backing out, so they were a day late and a dollar short

But I do find this an interesting tactic and is kind of new? (someone correct me if I'm wrong, but this was unheard of in the past)
The lender probably said…well if this person refinances and we lose all that interest income, we might as well give them a xx discount on the interest and get less over time, but will still collect on that income from a very creditworthy and reliable payer
I can't imagine it's a good thing for the lender when you pay off your loan, they lose out on a ton of income
I had to sign something that I wouldn't refi in under 6 months (although I don't really think that was binding as it wasn't actually on the loan doc, I don't plan to test it)

I'd also imagine since it's with the same lender and they are just restructuring your existing loan…you avoid all the headaches of closing
In VA I has to pay $1k just for the privilege of starting a new loan in this state, that's it nothing else
Plus all the other costs in closing

Also you would not increase the term or principal to do this..which is really a BIG benefit

Not to mention the hour or so of signing documents and the time it takes to collect all the data they request
Based on what you say, it's a pretty good deal and I wouldn't even think twice
Nice going Ms Hutch

Just wrote:
Well we did all the paperwork for the refi and they sent us this letter very quickly with the offer to just lower rate

I don’t think we would have gotten offer without having done all the paperwork… not sure if this letter was sent because our application was strong or what

hmm..this is interesting as I wonder if when your credit is run and your 'new lender' requests the payoff amt, they quickly get an offer like this out

excontradiction wrote:
Most of the savings on a refinance comes from extending your debt out to 30 years,  not from the difference in the interest rate.

This is 100% true, but my loan was about 14 months old at time of Refi
so that wasn't as big as a factor as the loan I was taking out was similar to the loan I took out one year ago

evilizac wrote:
  How does one negotiate that?

I think it might be kicked of by starting a refi process…but never hurts to just call and ask

She also, for some reason wants to refi with Bank of America because she believes (because of one anecdote from a colleague) that they won't sell off our loan like ours has been sold three times in the past five years.

This is not a logical way to look at this
As long as you have a deed and the bank has the lien on the note (I may have mixed up terminology here) you are good
It really doesn't matter who the lender is, I'm not sure how this could have any impact on anything
Your terms will never change, if they go out of business…someone immediately is going to buy that loan and that term will just transfer to them.  I've never really heard of problems with lenders that impact the customer, I'm sure it happens, but I think it's rare

Now something you always have to pay for (which sometimes is stupid if you already owned the home) is Title insurance
Leins on a property can sometimes just be hanging out there unknow for years and just show up and you have almost no recourse
hence the insurance.  I have heard vendors who do work on your property can put a lien on your home if you don't pay them…so that can happen when someone did construction on your home 5 years before you bought it


I've had loans sold to other lenders before made my first payment, then sold again a few months later to another lender
I remember in SF, I had a loan in the 6% range, which was high…(but you on get the rates that are available when you close on your house, you can shop around, but usually isn't that much a difference out there…there is some what of a base if you have good credit
now if you don't have good credit all that goes out the window, I take better care of my credit than I do my teeth )

That loan was with someone and then a few months in BofA bought it and I was paying them
Then I refi'ed with some other random lender and a few months in BofA bought that loan
Was kinda crazy, but I felt like it would have been easier for everyone if BofA just said…hey why don't we just lower your rate and save everyone a lot of trouble and headache

vansmack wrote:
Did you run numbers on paying half your mortgage every two weeks instead of refinancing? 

Our rate is in the mid-3's and by budgeting an any every-two-week payment instead of a monthly payment, there was more long term savings to be had by structuring our payments that way rather then paying the refinance fees and looking for 1.5 less payments a month.  Over the last 25 years of the mortgage by paying 2 extra month of the mortgage per year, the savings are well into 6 figures and more than the savings from a lower rate (plus re-fi fees). 

Tracked down one of those calcs  https://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx
in my case, if I add just $50 extra a month…that cuts a little over 2 years of payments off
So still netting $270~ in savings and having a shorter term than the loan I already had

everyone should always pay a little extra in their mortgage payments…because it goes DIRECTLY to reducing the principal

If one did what smakie proposes (basically an extra full month payment a year applied directly to principal)…that would make your 30 year loan close to a 26 year loan…just look how much you'd pay in the interest of those 4 years and that's a lot of bacon

Actually, he proposed 2 months extra a year…that would cut close to 7 years off the loan!

As you said, especially while the interest rates on savings are so low, no sense paying less when paying more can save more money in the long run.   

who lives in a home for 30 years or keeps a loan that long…do you think you will to actually have a real benefit

Space wrote:
Would that kind of philosophy work as well on a mortgage where one has 9-10 years left on a 15 year mortgage?

I'm curious what you came up with…even on that short a term, there would be real savings

totally wrote:

vansmack wrote:
Did you run numbers on paying half your mortgage every two weeks instead of refinancing? 

Our rate is in the mid-3's and by budgeting an any every-two-week payment instead of a monthly payment, there was more long term savings to be had by structuring our payments that way rather then paying the refinance fees and looking for 1.5 less payments a month.  Over the last 25 years of the mortgage by paying 2 extra month of the mortgage per year, the savings are well into 6 figures and more than the savings from a lower rate (plus re-fi fees). 

Tracked down one of those calcs  https://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx
in my case, if I add just $50 extra a month…that cuts a little over 2 years of payments off
So still netting $270~ in savings and having a shorter term than the loan I already had

everyone should always pay a little extra in their mortgage payments…because it goes DIRECTLY to reducing the principal

If one did what smakie proposes (basically an extra full month payment a year applied directly to principal)…that would make your 30 year loan close to a 26 year loan…just look how much you'd pay in the interest of those 4 years and that's a lot of bacon

Actually, he proposed 2 months extra a year…that would cut close to 7 years off the loan!

As you said, especially while the interest rates on savings are so low, no sense paying less when paying more can save more money in the long run.   

who lives in a home for 30 years or keeps a loan that long…do you think you will to actually have a real benefit

Space wrote:
Would that kind of philosophy work as well on a mortgage where one has 9-10 years left on a 15 year mortgage?

I'm curious what you came up with…even on that short a term, there would be real savings

I haven't even looked at it. If I did, I would have to do 100% of the work, as my wife says she doesn't have time for such pursuits. I'm not actually sure how much of the 15 year is left, that was a guess…..maybe this can be an MLK Day home improvement project for me.

Bottom line if you can talk to a financial planner about your goals and they can best tell you what makes sense for you

It’s not as cut and dried as pay off as much as you can as soon as possible

You may expect your income to increase and that may enter your calculations (I will have more money to spend on mortgage down the road)

You may feel there are certain expenditures you need to make now..maybe you have kids who will have needs and will be with you only a few more years…maybe instead of directing extra cash to a mortgage you may be thinking about them going to college

Maybe you want to invest in another property say a vacation spot…

Maybe you already have a second property whose mortgage rate is higher but can’t be refinanced in which case paying off that mortgage first will make financial sense

Everyone’s situation might be different … keep that in mind

Maybe you actually have an idea on an investment that would make you way more money than the savings that will accrue from plowing more of your disposable income into your mortgage

wow.

Just wrote:
Bottom line if you can talk to a financial planner about your goals and they can best tell you what makes sense for you

It’s not as cut and dried as pay off as much as you can as soon as possible

You may expect your income to increase and that may enter your calculations (I will have more money to spend on mortgage down the road)

You may feel there are certain expenditures you need to make now..maybe you have kids who will have needs and will be with you only a few more years…maybe instead of directing extra cash to a mortgage you may be thinking about them going to college

Maybe you want to invest in another property say a vacation spot…

Maybe you already have a second property whose mortgage rate is higher but can’t be refinanced in which case paying off that mortgage first will make financial sense

Everyone’s situation might be different … keep that in mind

All possibilities. I think I'm a pretty good financial planner so have never considered paying someone else to do it for me. My wife is much less of a planner about most things, so sometimes that's a challenge.

Yada wrote:
wow.

Wow what?

Space wrote:

Just wrote:
Bottom line if you can talk to a financial planner about your goals and they can best tell you what makes sense for you

It’s not as cut and dried as pay off as much as you can as soon as possible

You may expect your income to increase and that may enter your calculations (I will have more money to spend on mortgage down the road)

You may feel there are certain expenditures you need to make now..maybe you have kids who will have needs and will be with you only a few more years…maybe instead of directing extra cash to a mortgage you may be thinking about them going to college

Maybe you want to invest in another property say a vacation spot…

Maybe you already have a second property whose mortgage rate is higher but can’t be refinanced in which case paying off that mortgage first will make financial sense

Everyone’s situation might be different … keep that in mind

All possibilities. I think I'm a pretty good financial planner so have never considered paying someone else to do it for me. My wife is much less of a planner about most things, so sometimes that's a challenge.

Saving money doesn't equate to making your money work for you…and I'm guessing you're a good saver $pace.

Space wrote:

Yada wrote:
wow.

Wow what?

For the cost of an overpriced beer, I would've been happy to do a crash course via zoom to walk some of you through the ins and outs of refinancing.

Yada wrote:

Space wrote:

Yada wrote:
wow.

Wow what?

For the cost of an overpriced beer, I would've been happy to do a crash course via zoom to walk some of you through the ins and outs of refinancing.

We've done it twice since our initial purchase 16 years ago. It's not rocket science. How many times do people typically refinance over the course of a long term home ownership?

Yada wrote:

Space wrote:

Just wrote:
Bottom line if you can talk to a financial planner about your goals and they can best tell you what makes sense for you

It’s not as cut and dried as pay off as much as you can as soon as possible

You may expect your income to increase and that may enter your calculations (I will have more money to spend on mortgage down the road)

You may feel there are certain expenditures you need to make now..maybe you have kids who will have needs and will be with you only a few more years…maybe instead of directing extra cash to a mortgage you may be thinking about them going to college

Maybe you want to invest in another property say a vacation spot…

Maybe you already have a second property whose mortgage rate is higher but can’t be refinanced in which case paying off that mortgage first will make financial sense

Everyone’s situation might be different … keep that in mind

All possibilities. I think I'm a pretty good financial planner so have never considered paying someone else to do it for me. My wife is much less of a planner about most things, so sometimes that's a challenge.

Saving money doesn't equate to making your money work for you…and I'm guessing you're a good saver $pace.

I put my leftover money into 529 and 401K max and catchup. She puts hers into weed, CBD, and 401K max. Just looked at our EOY statements and think we're doing ok. :)

Space wrote:

Yada wrote:

Space wrote:

Just wrote:
Bottom line if you can talk to a financial planner about your goals and they can best tell you what makes sense for you

It’s not as cut and dried as pay off as much as you can as soon as possible

You may expect your income to increase and that may enter your calculations (I will have more money to spend on mortgage down the road)

You may feel there are certain expenditures you need to make now..maybe you have kids who will have needs and will be with you only a few more years…maybe instead of directing extra cash to a mortgage you may be thinking about them going to college

Maybe you want to invest in another property say a vacation spot…

Maybe you already have a second property whose mortgage rate is higher but can’t be refinanced in which case paying off that mortgage first will make financial sense

Everyone’s situation might be different … keep that in mind

All possibilities. I think I'm a pretty good financial planner so have never considered paying someone else to do it for me. My wife is much less of a planner about most things, so sometimes that's a challenge.

Saving money doesn't equate to making your money work for you…and I'm guessing you're a good saver $pace.

I put my leftover money into 529 and 401K max and catchup. She puts hers into weed, CBD, and 401K max. Just looked at our EOY statements and think we're doing ok. :)

I didn't say you weren't doing ok, but you did prove me right.

Guys let’s not turn this into a dick size contest cause mine is the biggest