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Old 04-19-2018, 08:01 AM
 
12,327 posts, read 8,756,875 times
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Quote:
Originally Posted by dspguy View Post
I just want to give you a number to think about:

Over 15 years, that 3% reduction to your contributions will have a trade-off of about 93 earned in market gains for every dollar you didn't invest. Caveat: That's at 8% average market gains. At 5%, you are losing about 50 for every dollar you didn't invest.

I'm not saying to NOT do what you are doing. I just want you to be better equipped with information so you can make a decision.

If you want some hard figures:

Spoiler
If you earn say... 65k, 15% contributions after 15 years (your mortgage duration) is about 150k of contributions and might grow to about 220k (5% market return) or 287k (8% market return).

That same exercise: 65k, 12% contributions after 15 years is about 118k invested and would grow to about 176k (5% rate) or 229k (8% rate).

I just chose 5% and 8% for laughs. In recent history, 3 and 5 year returns are about 8% yearly, so I'm 8% might be not off the mark, but 5% might be pessimistic.

The point is, if you decide to divert some of your retirement savings so you can fund something like buying a house now, be responsible and try and get that contribution back to 14 or 15% as you get raises.
I second this advice. Simple yet powerful.
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Old 04-20-2018, 12:59 PM
 
467 posts, read 332,463 times
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Quote:
Originally Posted by ncole1 View Post
I second this advice. Simple yet powerful.
Yeah, that's the plan,
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Old 04-21-2018, 04:14 PM
 
2,170 posts, read 1,025,002 times
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Quote:
Originally Posted by Louisville Slugger View Post
So on November 2020 my 7/1 ARM starts to adjust. I started out with a 3.125% rate which was really good at the time and still is. When I first decided to go with the ARM I wasn't sure if I was still going to be living in the place after 7 years. It looks like there's a good chance I'll still be there. I was thinking about refinancing to another 7/1 ARM 6 months to 1 year before my current one resets. The 7/1 ARM rate hasn't changed all that much in the last five years at the lender I am with now.

I have been prepaying $115 to the principle of my mortgage each month since I bought my condo almost 5 years ago. This surprisingly shaves almost 7 years off the loan.

My feelings are if I refinance to another ARM I lock in another low rate for at least 7 years then continue to prepay towards principle. If I am still living there after the next 7 years (14 in total now) I could possibly refinance to a 10 year mortgage.

The other option would be to refinance to a 20 year mortgage at current rates. Most likely it would be a full percentage point higher. My payments would be a little higher and I would be paying more in interest.

I figure I have time so I don't want to make a rash decision. Even if I decided to not refinance and let the mortgage adjust the new rate would probably still be a lot lower compared to whatever the 20 year rate would be at the time of adjustment. Rates are pretty much going up at this point.

Let me know your thoughts.
Well, you left out the most important aspect: What the terms of your current loan? Only then can you make an evaluation to your question.
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Old 05-22-2018, 09:39 AM
 
467 posts, read 332,463 times
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Quote:
Originally Posted by leastprime View Post
Well, you left out the most important aspect: What the terms of your current loan? Only then can you make an evaluation to your question.
My apologies. I believe my terms were, fixed at 3.125% for the first 7 years of the loan (reset at November 2020). Rate can go up 2% each year until it reaches the lifetime cap of 6% plus the initial rate so 9.125%.

Just a little update. I should be closing within the next two weeks on my refinance. This is going to cost over $3,000. My new payment is going to be $200 more compared to the minimum payment plus the prepayment I was making on my old mortgage. Old mortgage was $650 plus $115 prepayment, $765. New mortgage will be $966. 3.99% for 15 years. $200 more to shave of 10 years? Sounds like a good plan to me.

I won't get to see the appraisal until closing. I am just waiting on my neighbor to get a 6D certificate notarized so I can send a copy to the title company handling my closing.
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Old 05-22-2018, 03:58 PM
 
3,259 posts, read 7,014,632 times
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Never ceases to amaze me how diligently people overthink mortgage rates and fees.
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Old Today, 08:45 AM
 
467 posts, read 332,463 times
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The fees were a lot less than I expected. I paid around $1,700 cash and $700 (for other fees) were rolled into my existing mortgage.

New mortgage payment starts August 1. I don't have a payment for July.

Appraisal came back at $76,500 above the selling price.

Crazy.
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Old Today, 10:57 AM
 
Location: Phoenix, AZ
1,009 posts, read 360,094 times
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Quote:
Originally Posted by Pfhtex View Post
Never ceases to amaze me how diligently people overthink mortgage rates and fees.
Never ceases to amaze me how people convince themselves that refinancing is a good thing.


Here the OP has higher payment, a new 15 year loan period, and closing costs rolled into the loan.


I wonder is OP understands that the 5 years of interest paid on the old loan just went down the toilet.


I don't get it.


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