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Old 12-15-2018, 03:36 PM
 
715 posts, read 156,887 times
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Quote:
Originally Posted by Japanfan1986 View Post
Can the 30 yr. mortgage be refinanced into a 15 year or less? Iím not arguing with you, but to qualify for a mortgage I plan on taking in January 2020 or somewhere there about Iíll probably have to do the 30 year. Of course Iíd rather pay more and not suffer all the interest and get it refinanced into a 15 year or less, but donít know how difficult or possible that is to do.
You look for a loan where you can get a mortgage modification. This is where you don't have to go through refinance costs. They simply change the interest rate and term to what is available and at very little cost. This is why people need to shop for more than the interest APR being offered by one lender, because if they don't own the loan and will re-sell it, then you don't get a mortgage modification.

If you do a refinance that is just like going through to buy the house. Takes a long time and there are costs. But when you do this, you can shop around for better rates and loan features as I mentioned with their competition.
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Old 12-15-2018, 03:40 PM
 
Location: Northern panhandle WV
2,514 posts, read 1,854,376 times
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Quote:
Originally Posted by Pfhtex View Post
Where are you? Investment properties require 20% down, investment multi-units (1-4) require 25% down in America.

The relative wisdom of the move, IMO, has to do with your access to capital in the future. You generally cannot do a cash-out refinance over 80% of the value of the home (85% FHA, 100% VA, but for the most part it's 80%.)

To that end, if something were to happen in the future that required funds "now," and you sunk your savings into a 20% down payment, it's suddenly not a smart move.

I'm a huge fan of carrying the bulk of your debt in the house. Mortgage interest, for the most part, is a tax write-off, and mortgage rates tend to be lower than credit cards. So, keep open-and-empty credit cards, try to avoid a car payment, and if this can be facilitated by a 3-5% down payment on a house, so be it.

Mortgage rates tend to be very similar for higher-credit borrowers, on conventional loans, whether you put 3-5% or 20% down. You can avoid Mortgage insurance by doing a piggyback loan, such as an 80% first mortgage and then a second mortgage for 10%, 15% or (next month) the remaining entire 20% of the price.

Sure, equity is great, but not if it means carrying thousands in higher-interest credit card debt.

I personally am a fan of this strategy, but I totally understand that it can also make smart people uncomfortable, too.
I am in Northern West Virginia. and when we bought our house here the bank wanted 20% down if you were going to occupy it and required 50% if we wanted to rent it out.
Could be just that bank but that is the bank we wanted to use, they also keep all mortgages in house.
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Old 12-15-2018, 04:19 PM
 
7,975 posts, read 3,936,724 times
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Quote:
Originally Posted by EmiSky View Post
I disagree, I'd rather pay higher interest on a credit card for a while than pay interest on 30 yr. mortgage. Are people looking at their mortgage statements to see how much they're paying in interest? One can easily pay $1000 in interest per month on their mortgage. Personally, I can't wait to pay off my mortgage so I'm not throwing money away in interest. So, it my opinion, the more money you put down the better!

Wait. What? There is no scenario where it's better to pay 12-15% or more on a credit card balance than 4-5% mortgage. Not that you can buy a house on a credit card. The principal/interest breakdown on a mortgage changes from nearly all interest in the beginning to nearly all principal in the end.
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Old 12-15-2018, 04:23 PM
 
756 posts, read 514,704 times
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Quote:
Originally Posted by rummage View Post
You look for a loan where you can get a mortgage modification. This is where you don't have to go through refinance costs. They simply change the interest rate and term to what is available and at very little cost. This is why people need to shop for more than the interest APR being offered by one lender, because if they don't own the loan and will re-sell it, then you don't get a mortgage modification.

If you do a refinance that is just like going through to buy the house. Takes a long time and there are costs. But when you do this, you can shop around for better rates and loan features as I mentioned with their competition.
Thanks so much for the info. So a mortgage modification sound like it would be much more preferable. If Iím understanding you right then with a mortgage modification you keep the same lender and itís just a matter of changing your payment amount and the interest rates, etc. that go with it. With refinancing youíre changing your lender completely.
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Old 12-15-2018, 04:44 PM
 
Location: Raleigh NC
8,085 posts, read 6,364,066 times
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there are many loan programs/lenders that don't charge PMI over 80% LTV. Most are from "local" lenders not the mega-banks, but even they have other options sometimes.

beyond that, there's a lot of bad advice which blurs the nuggets of good practice.
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Old 12-15-2018, 06:07 PM
 
82 posts, read 27,485 times
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Quote:
Originally Posted by oceangaia View Post
Wait. What? There is no scenario where it's better to pay 12-15% or more on a credit card balance than 4-5% mortgage. Not that you can buy a house on a credit card. The principal/interest breakdown on a mortgage changes from nearly all interest in the beginning to nearly all principal in the end.
Well, lets look at this scenario. I would venture to say that most people don't carry a credit card balance for 30 yrs. So lets say you have $15k in credit card debt at 15% interest rate. I think it would be realistic for one to want to pay it off in 5 yrs. (or less). Your payment would be $357 per month. The total interest you would pay in 5 yrs. you would be $6407.

Now, lets say you purchase a house for $400k at 4% interest rate and put down 20%, which would be $80k. In the first 5 yrs. you would pay $1000 per month in interest alone, that's $60k in interest in 5 yrs. You would end up paying over $227k in interest for the life of the loan. So your $400k will end up costing aprox. $627k, if you don't pay down your loan or refinance.


That's why, I always try to add extra payments to my mortgages. In most cases, adding $200k extra to you mortgage payment will have greater impact in reducing your debt than adding $200 towards your credit card debt.

Don't get me wrong, I don't like credit card debt, and ultimately I want to be debt free all together, but you have to makes you decisions wisely. I am familiar with the tax deductions, but it's not as great as the interest you pay on your mortgage.

Last edited by EmiSky; 12-15-2018 at 06:23 PM..
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Old 12-15-2018, 06:13 PM
 
Location: Central New Jersey
1,916 posts, read 662,523 times
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To put down as much as you can possibly afford would be key. 20% is the minimum to avoid the PMI fees which add up. Every home we purchased so far we strapped ourselves so we'd have the lowest monthly payment possible. So long as you don't live beyond your means you should have a reserve stash saved up in no time. Our current home I believe we put down 66% or thereabouts.
Good luck
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Old 12-15-2018, 06:22 PM
 
82 posts, read 27,485 times
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Quote:
Originally Posted by Japanfan1986 View Post
Can the 30 yr. mortgage be refinanced into a 15 year or less? I’m not arguing with you, but to qualify for a mortgage I plan on taking in January 2020 or somewhere there about I’ll probably have to do the 30 year. Of course I’d rather pay more and not suffer all the interest and get it refinanced into a 15 year or less, but don’t know how difficult or possible that is to do.
Yes, you will certainly be able to refinance down the road. How quickly you will be able to refinance to a 15 yr. or 10 yr. loan will depend on couple of factors; how quickly your property will appreciate, which will mean how much equity you will have and how much of a loan you will be able to manage.

When I refinanced my rental property, the payments on my new 15 yr. loan were about the same as my previous 30 yr. old loan based on my equity and the interest rate at the same time. I personally feel that it's best to refinance to a short yr. loan, like 15 yrs. or so because then right away more of your money goes towards principal rather than interest. But I have friend who's of a school of thought that thinks it's better to refinance to 30 yrs. so she has a lower mortgage. Then again, she purchased a $900k house that's worth about $1.2M. I'm about 10 yrs. away from retirement and I don't want to have a mortgage when I retire so my objective is to pay off my mortgage as soon as possible; both on my rental and where I live. So I'm a big proponent of refinancing to a 15 yr. old loan or even less, when possible. But I understand there different schools of thoughts on this.

And yes, I think home ownership is the way to go. When I purchased my second home I had to pay PMI (mortgage insurance) so that I could still afford to keep my first home (and rent it out) and get my second home. Even though I hated paying PMI bc it was like throwing money away, it still beats throwing money away for rent. I eventually refinanced and got rid of the PMI and I'm glad I was able to get this house. So yes, even if you have to stretch a bit and sacrifice on other things, home ownership is most certainly worth it!
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Old 12-15-2018, 07:37 PM
 
7,975 posts, read 3,936,724 times
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Quote:
Originally Posted by EmiSky View Post
Well, lets look at this scenario. I would venture to say that most people don't carry a credit card balance for 30 yrs. So lets say you have $15k in credit card debt at 15% interest rate. I think it would be realistic for one to want to pay it off in 5 yrs. (or less). Your payment would be $357 per month. The total interest you would pay in 5 yrs. you would be $6407.

Now, lets say you purchase a house for $400k at 4% interest rate and put down 20%, which would be $80k. In the first 5 yrs. you would pay $1000 per month in interest alone, that's $60k in interest in 5 yrs. You would end up paying over $227k in interest for the life of the loan. So your $400k will end up costing aprox. $627k, if you don't pay down your loan or refinance.

I'm not getting what you're trying to say. Why are you comparing the interest on a $15K loan with a $320K loan for the 5 years? Of course the total interest will be greater on a loan over 20x the size of a credit card balance. $6407 on $15K extrapolates to $136,682 on $320K.
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Old 12-15-2018, 07:47 PM
 
82 posts, read 27,485 times
Reputation: 93
Quote:
Originally Posted by oceangaia View Post
I'm not getting what you're trying to say. Why are you comparing the interest on a $15K loan with a $320K loan for the 5 years? Of course the total interest will be greater on a loan over 20x the size of a credit card balance. $6407 on $15K extrapolates to $136,682 on $320K.
I was replying to someone who stated s/he would rather pay down higher interest rate credit card vs. lower rate mortgage. My opinion is that I'd rather focus paying down my mortgage vs. higher interest credit card as I will be saving money.
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