|
|
07-08-2012, 01:57 PM
|
#21
|
Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: St. Louis
Posts: 2,179
|
Quote:
Originally Posted by tmm99
I thought these Option ARM borrowers will have to come up with the difference between how much the house is worth now (which is less than what their loan is for) and their loan amount (minus the principal they might have accumulated) when it resets (recasts)?
|
Ah...well, it appears we may have been both somewhat correct (I never fully researched Option ARMs before-just thought they had a 'pay as much as you want' feature).
It appears Option AMRs may have had both a super-low teaser intro rate (even below current benchmarks), as well as having the "pay however much principal you want" feature. However, from what I can tell, they don't usually seem to require a balloon readjustment if your house value drops after the opening term.
Quote:
Originally Posted by PawPrint53
I have tried unsuccessfully to refinance the $50K I owe on a rental house because even the investor rate is low. However, according to several mortgage brokers, the market for smaller loans dried up about 18 months ago.
|
What if you tried this: PenFed is offering up to a 5 year, 1.99% home equity loan, opened on-line only, no fees. Just take out this loan on your primary residence, and use it to pay off that rental $50k balance. I imagine your rental rate is at least, what, 5%? Maybe more? Instant huge savings on your interest costs. Could possibly still deduct the interest off your taxes.
__________________
Dryer sheets Schmyer sheets
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
07-08-2012, 02:41 PM
|
#22
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
|
Quote:
Originally Posted by MooreBonds
What if you tried this: PenFed is offering up to a 5 year, 1.99% home equity loan, opened on-line only, no fees. Just take out this loan on your primary residence, and use it to pay off that rental $50k balance. I imagine your rental rate is at least, what, 5%? Maybe more? Instant huge savings on your interest costs. Could possibly still deduct the interest off your taxes.
|
They also offer HELOCs on rentals, including a 5/5 product that offers a fixed rate for the first 5 years. Or you could lump sum pay it off and be done with it.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
|
|
|
07-08-2012, 03:11 PM
|
#23
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
|
Quote:
Originally Posted by tmm99
MooreBonds,
I thought these Option ARM borrowers will have to come up with the difference between how much the house is worth now (which is less than what their loan is for) and their loan amount (minus the principal they might have accumulated) when it resets (recasts)? So I am guessing many of them won't be able to come up with the difference (especially in places like CA, NV, FL where the price drop has been significant - I believe most of Option ARMs are however originated in CA by investors).
|
That isn't how the recast works, but its almost certainly a moot point by now. Default experience in Option ARMs has been off the charts so I think they have mosly already blown up.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
|
|
|
07-08-2012, 03:59 PM
|
#24
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,764
|
I recently tried to get a refi with similar terms as Brewer's, but I didn't qualify because of high income to debt ratio. I've been doing the FIRE finance thing, living off cash, small amounts of dividends and cap gains, and a small ($20K-ish) side business. Balanced against that is my current mortgage, many years worth of carryover cap losses, etc, which has combined to keep me in the 10-15% tax brackets. It's been great for selling high gain stocks at 0% cap gains levels and doing Roth conversions at low rates, but now it's tripping me up.
I only see two options. First would be to pay off my current mortgage of $380K at $4.75%, and hope I could qualify for a new one at ~3.5%. But I'm not sure how long it would need to be on the books as paid off before it would be reflected on my financials so I could qualify for a new one. Anybody got any knowledge about that?
Second would be to get more of an income. I'm not sure how to do that. I don't have (or want) a job other than the easy money side gig I've got going now, which I can't really manipulate to produce more income. I could put all my cash into high dividend producing stocks, but that would take a couple of years before it produced the ongoing income I need, plus I don't want to increase my equity holdings that much. I could do a big Roth conversion this year to increase my taxable income and push myself into a higher tax bracket, but does that kind of thing count as income for a mortgage? And again, it could take so long I could miss out on the low rates and be stuck with no mortgage. Let it be said here that I'm one of the carry a mortgage types, so no need to lecture me on the joys of being paid off. I'm very willing to bet that in 10 years or so I will consider a $380K mortgage at 3.5% to be practically free money.
So, does anybody have any knowledge or ideas? Does the Roth conversion kick to my income count as far as mortgage income calculations go? I'd love to be able to take advantage of this. I never considered that having enough money to pay off the mortgage many times over wouldn't count towards my loan eligibility. Also the fact that I currently pay a higher payment without any problem, and a lower payment would only make paying the loan easier. Damn banking industry. Anyway, any help would be appreciated.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
|
|
|
07-08-2012, 04:09 PM
|
#25
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
|
Harley, I think you are stuck. The agencies are pretty much the entire mortgage market now so nobody does any real credit-based underwriting on mortgages any more. Everything is based on agency requirements and those are focused solely on income. Unless you are willing to get a day job that would allow you to qualify for a mortgage, you are stuck with what you have.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
|
|
|
07-08-2012, 04:47 PM
|
#26
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 8,808
|
Quote:
Originally Posted by brewer12345
Harley, I think you are stuck. The agencies are pretty much the entire mortgage market now so nobody does any real credit-based underwriting on mortgages any more. Everything is based on agency requirements and those are focused solely on income. Unless you are willing to get a day job that would allow you to qualify for a mortgage, you are stuck with what you have.
|
Suppose one has (1) Social Security income, (2) withdrawals from retirement accounts. What does the government want to see from item #2 to get the best rates? The retirement withdrawals for us are completely discretionary.
|
|
|
07-08-2012, 04:59 PM
|
#27
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
|
Quote:
Originally Posted by Lsbcal
Suppose one has (1) Social Security income, (2) withdrawals from retirement accounts. What does the government want to see from item #2 to get the best rates? The retirement withdrawals for us are completely discretionary.
|
I don't know. The underwriting software from Fannie and Freddie changes regularly. The best way to find out would be a frank chat with a mortgage broker.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
|
|
|
07-08-2012, 05:21 PM
|
#28
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2007
Posts: 5,596
|
Hew Brew, always good to hear from you. DH and I put our house on the market about a month ago here in the DC area. Carefully priced with a top notch agent plus verified with our own independent research. No takers yet but lots of lookers. Already thinking about a price drop before the summer slump hits. Hope this gives us hope....
__________________
I purr therefore I am.
|
|
|
07-08-2012, 05:33 PM
|
#29
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,764
|
Quote:
Originally Posted by Lsbcal
Suppose one has (1) Social Security income, (2) withdrawals from retirement accounts. What does the government want to see from item #2 to get the best rates? The retirement withdrawals for us are completely discretionary.
|
I'm like 14 years away from getting SS, but I know that works just fine for income for a mortgage, as would a pension or a SPIA. I'm pretty sure the retirement withdrawals don't help. That's just money in an account, not an "income". If that counted I'd have qualified. Althouth I guess RMDs would count. Maybe in 14 or 15 years we'll have made it through the next bust/boom cycle and rates will be low again. Then I'll have SS and RMDs, and can get a freaking mortgage worth < 10% of my net worth. Grrrr.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
|
|
|
07-08-2012, 05:37 PM
|
#30
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 8,808
|
Quote:
Originally Posted by harley
I'm like 14 years away from getting SS, but I know that works just fine for income for a mortgage, as would a pension or a SPIA. I'm pretty sure the retirement withdrawals don't help. That's just money in an account, not an "income". If that counted I'd have qualified. Althouth I guess RMDs would count. Maybe in 14 or 15 years we'll have made it through the next bust/boom cycle and rates will be low again. Then I'll have SS and RMDs, and can get a freaking mortgage worth < 10% of my net worth. Grrrr.
|
2 years ago the retirement withdrawals were considered income. You have to show them the Fed 1040 where it was taxed. But maybe things have changed?
|
|
|
07-08-2012, 05:48 PM
|
#31
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,764
|
Quote:
Originally Posted by Lsbcal
2 years ago the retirement withdrawals were considered income. You have to show them the Fed 1040 where it was taxed. But maybe things have changed?
|
Sorry, but I may have misunderstood. If by retirement accounts you mean IRAs or 401(k)s, you may be right about them counting. I'm not eligible yet for withdrawals from those without penalties, so my retirement accounts are all after tax. It could be that what shows up on line 37 (AGI) of your Federal Taxes is the most important thing, or it might be line 43 (Taxable Income) is most important. I have a decent AGI, but am only in the 4 digit range in taxable.
Well, if I'm stuck in no-refi land, maybe I can make up the difference with ongoing low cost Roth conversions.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
|
|
|
07-08-2012, 06:43 PM
|
#32
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 8,808
|
Quote:
Originally Posted by harley
...(snip)...
Well, if I'm stuck in no-refi land, maybe I can make up the difference with ongoing low cost Roth conversions.
|
We had been doing Roth conversions before taking SS. Our conversions were high enough to make it look like highish AGI on the 1040. So this luckily allowed us to qualify for a refi in 2010.
It might not help you right now, but should the rate situation continue towards the end of the year you could make a large Roth conversion to push up your AGI in December. Then take that to your loan source maybe in January 2013.
|
|
|
07-08-2012, 06:46 PM
|
#33
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,764
|
Quote:
Originally Posted by Lsbcal
We had been doing Roth conversions before taking SS. Our conversions were high enough to make it look like highish AGI on the 1040. So this luckily allowed us to qualify for a refi in 2010.
It might not help you right now, but should the rate situation continue towards the end of the year you could make a large Roth conversion to push up your AGI in December. Then take that to your loan source maybe in January 2013.
|
That was one of my thoughts, but if that qualifies me for the loan I'll be really PO'd. Not that I won't take the money, but still, how stoopid can they be?
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
|
|
|
07-08-2012, 08:09 PM
|
#34
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 8,808
|
Quote:
Originally Posted by harley
That was one of my thoughts, but if that qualifies me for the loan I'll be really PO'd. Not that I won't take the money, but still, how stoopid can they be?
|
They were stupid in 2010. Human nature to get excessively dumb in the other direction after the errors of previous years.
|
|
|
07-09-2012, 08:09 AM
|
#35
|
Full time employment: Posting here.
Join Date: Apr 2010
Posts: 853
|
what the hey! locked with that home box loan outfit brewer mentioned. For $360 to bring us down to a 3.5% and save $125/month, why not?
it can't be any worse than our current lender...
|
|
|
07-09-2012, 10:34 AM
|
#36
|
Thinks s/he gets paid by the post
Join Date: Jan 2006
Posts: 1,645
|
Too bad Box doesn't loan to residents of my state. I am still looking for no/low closing cost refis. Am at 4.875 fixed right now.
|
|
|
07-09-2012, 11:22 AM
|
#37
|
Thinks s/he gets paid by the post
Join Date: Feb 2008
Location: Indialantic FL
Posts: 1,330
|
I was more than shocked when we were able to get approved for a 417k mortgage on top of the 320K we were already in debt on with a mortgage on a primary and a home equity loan on a rental. The mortgage broker said that we were at the max 45% debt to income ratio...We did what I would never recommend someone else do, replace our primary home before selling it. Lucky for us we closed on the sale of our primary home 3 days after our closing on our new home.
I asked the mortgage broker how we were able to get approved and she said combination of high credit scores, stable retirement income, and age (young enough to go back to work if we needed to). Hmmm
__________________
JimnJana
"The four most dangerous words in investing are 'This time it's different.'" - Sir John Templeton
|
|
|
07-09-2012, 03:02 PM
|
#38
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2003
Location: Florida's First Coast
Posts: 7,666
|
If mortgae rates are so low, Would it be worth financing our home that is owned free and clear? At 3% money is so cheap. Rates HAVE to rise sooner or later. I have toyed with this for a while now. Perhaps get an interest only 15 year or something. We have not had a mortgage payment since 1997 it may be hard to go back to one.
SWR.
__________________
"Never Argue With a Fool, Onlookers May Not Be Able To Tell the Difference." - Mark Twain
|
|
|
07-09-2012, 03:22 PM
|
#39
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
|
SWR, if I recall correctly you are uncomfortable with any investment other than CD's, etc. So I would have to assume you'd be investing whatever funds you receive from taking out a mortgage at 1-2%, losing the difference between the interest earned and what you are paying in interest on the mortgage - plus inflation losses. And if interest rates don't increase significantly for the next several years...?
Sounds like a sure fire way to speed up depleting a portfolio to me, but then check my sig line.
__________________
Numbers is hard
|
|
|
07-09-2012, 03:37 PM
|
#40
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
|
Quote:
Originally Posted by REWahoo
SWR, if I recall correctly you are uncomfortable with any investment other than CD's, etc. So I would have to assume you'd be investing whatever funds you receive from taking out a mortgage at 1-2%, losing the difference between the interest earned and what you are paying in interest on the mortgage - plus inflation losses. And if interest rates don't increase significantly for the next several years...?
Sounds like a sure fire way to speed up depleting a portfolio to me, but then check my sig line.
|
Probably the much easier and cheaper way to make this "play" in one's portfolio is to buy a put option on TLT or enter into a similar position in the 30 year treasury futures market. I don't necessarily advise doing so (the decision on whether this is a wise idea is an exercise left up to the reader), but doing it via taking out a morgage seems like an awfully inconvenient and expensive way to do so.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|