|
|
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!
|
Proper qualifications....proper goals.....proper results.
12-21-2008, 10:01 AM
|
#2
|
Recycles dryer sheets
Join Date: Nov 2008
Posts: 153
|
Proper qualifications....proper goals.....proper results.
Now, if all the banks, etc. will require folks to have the proper qualifications with enough down payment %, without too much other debt, with reasonable steady employment, etc. etc. and rates are low maybe we can begin to get out of the mess and get some real movement on real estate sales going again vs. the not real "flipping" of property for a short term profit.
|
|
|
12-21-2008, 11:13 AM
|
#3
|
Recycles dryer sheets
Join Date: Dec 2008
Posts: 299
|
Quote:
Originally Posted by liveitup
|
Unfortunately it's not quite here yet. I just did an online quote. For a 300k loan at 4.25%, it wants $9,455 for lender fees.
|
|
|
12-21-2008, 12:52 PM
|
#4
|
Recycles dryer sheets
Join Date: Jul 2008
Location: ENE MO - near STL
Posts: 424
|
Quote:
Originally Posted by thefinancebuff
Unfortunately it's not quite here yet. I just did an online quote. For a 300k loan at 4.25%, it wants $9,455 for lender fees.
|
Yes, the real question is what is the APR?
|
|
|
12-21-2008, 01:11 PM
|
#5
|
Full time employment: Posting here.
Join Date: Jul 2008
Posts: 622
|
Quote:
Originally Posted by Gardnr
Yes, the real question is what is the APR?
|
I don't know why they are allowed to post any number but the APR. It doesn't matter if I'm getting a 1% loan if processing fees make the APR 10%.
|
|
|
12-22-2008, 01:41 PM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,327
|
Quote:
Originally Posted by Gardnr
Yes, the real question is what is the APR?
|
If you click the column that says "APR-Calculate", it will include the APR's for all the listed rates. The APR for the 4.25 rate loan is around 4.5 (still pretty good!), and the lowest cost loan is 5.375 (apr =5.379) with fees of only $162.00, but it's a sneaky looking chart because they don't detail the points vs. the other lender fees.
|
|
|
12-22-2008, 04:50 PM
|
#7
|
Recycles dryer sheets
Join Date: Dec 2008
Posts: 299
|
Quote:
Originally Posted by jazz4cash
If you click the column that says "APR-Calculate", it will include the APR's for all the listed rates. The APR for the 4.25 rate loan is around 4.5 (still pretty good!), and the lowest cost loan is 5.375 (apr =5.379) with fees of only $162.00, but it's a sneaky looking chart because they don't detail the points vs. the other lender fees.
|
The APR is not a good metric because it spreads the points and fees over the life of the loan, i.e. 30 years while the typical life of the loan is less than 7 years. If you spread the points and fees over 7 years or the expected life of the loan, the APR would be much higher if the points and fees are high.
|
|
|
12-22-2008, 09:00 PM
|
#8
|
Recycles dryer sheets
Join Date: Jul 2008
Location: ENE MO - near STL
Posts: 424
|
Quote:
Originally Posted by jazz4cash
If you click the column that says "APR-Calculate", it will include the APR's for all the listed rates. The APR for the 4.25 rate loan is around 4.5 (still pretty good!), and the lowest cost loan is 5.375 (apr =5.379) with fees of only $162.00, but it's a sneaky looking chart because they don't detail the points vs. the other lender fees.
|
Yeah, I answered that way without going to the web site. I was just pointing out the importance of figuring an APR since the OP just shouted about the rate. Once I went there I saw that feature.
As always it's very tricky and these sites are notorious for baiting with the lowest terms that almost nobody will actually qualify for. The devil's in the details.
|
|
|
12-22-2008, 09:03 PM
|
#9
|
Recycles dryer sheets
Join Date: Jul 2008
Location: ENE MO - near STL
Posts: 424
|
Quote:
Originally Posted by thefinancebuff
The APR is not a good metric because it spreads the points and fees over the life of the loan, i.e. 30 years while the typical life of the loan is less than 7 years. If you spread the points and fees over 7 years or the expected life of the loan, the APR would be much higher if the points and fees are high.
|
Very good point that people need to take into account. You can talk yourself into it by figuring a 30 yr duration but if you sell in 5 years the math is quite different.
It's also why it's difficult to assess a refil without knowing the specific individual's circumstances.
For me, I'm staying for the duration so the straight APR calculation is valid.
|
|
|
12-22-2008, 11:06 PM
|
#10
|
Dryer sheet wannabe
Join Date: Feb 2007
Posts: 18
|
Quote:
Originally Posted by Gardnr
Very good point that people need to take into account. You can talk yourself into it by figuring a 30 yr duration but if you sell in 5 years the math is quite different.
It's also why it's difficult to assess a refil without knowing the specific individual's circumstances.
|
I agree. IMO the best way to approach re-financing is to use an online calculator to determine if the package makes sense financially. If your calculated pay back (in months) is less than the time-frame that you are likely to sell the house - you will be ahead. This is the best calculator that I have found:
Mortgage Refinance Calculator: Refinancing One FRM Into Another FRM
I am in the process of re-financing and my calculated pay-back is in 12 months. My loan provider quoted the same pay-back period so either the numbers are accurate or they use the same calculator?!
|
|
|
12-22-2008, 11:30 PM
|
#11
|
Recycles dryer sheets
Join Date: Jul 2008
Location: ENE MO - near STL
Posts: 424
|
Quote:
Originally Posted by Sandman
I agree. IMO the best way to approach re-financing is to use an online calculator to determine if the package makes sense financially. If your calculated pay back (in months) is less than the time-frame that you are likely to sell the house - you will be ahead. This is the best calculator that I have found:
Mortgage Refinance Calculator: Refinancing One FRM Into Another FRM
I am in the process of re-financing and my calculated pay-back is in 12 months. My loan provider quoted the same pay-back period so either the numbers are accurate or they use the same calculator?!
|
On the other hand it depends on how you define your pay back. Most people will refi into the same term loan they had and take advantage of a lower payment. Then they calculate how long it will take to recoup costs based on that lower payment.
For me it was a different calculus. I had 17.5 years left on a 30 yr loan and refi'd into a 15 yr, dropping my interest rate from 6 to 4.25. My payment stayed about the same, but I pay it off 2.5 yrs earlier with about a 20K interest savings (it's actually worth more if you count the opportunity gain for my cash flow in that 2.5 yrs). So it doesn't actually pay off for me for 15 yrs but it's still definitely worth doing. Sometimes you have to take the long view.
|
|
|
12-23-2008, 12:43 AM
|
#12
|
Dryer sheet wannabe
Join Date: Feb 2007
Posts: 18
|
Quote:
Originally Posted by Gardnr
On the other hand it depends on how you define your pay back. Most people will refi into the same term loan they had and take advantage of a lower payment. Then they calculate how long it will take to recoup costs based on that lower payment.
|
Yeah, that's my situation - a very straightforward calculation in my case. My refi swapped a standard 30-year fixed to another at a much lower interest rate.
There is also the added benefit of securing a low interest rate if you intend to carry the mortgage into retirement. Generating 4.25% of income from your investment portfolio to cover the mortgage interest is a lot easier than having to generate >6%. Especially in today’s markets!
|
|
|
|
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
|
|
|