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Old 07-23-2020, 12:08 AM   #21
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Third Federal out of Ohio has a low cost 5 year ARM at 2.99 pct with only $295 closing cost. And you can relock at any time during the loan for another $295. They have other terms available soon.

Right now with rates low and so much uncertainty I would not be paying off the mortgage.
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Old 07-23-2020, 07:49 AM   #22
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Third Federal has pretty good HELOC programs also ( and the stock looks interesting too FWIW).
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Old 07-23-2020, 07:55 AM   #23
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Thanks troutnut1. That confirms my understanding. Iím always surprised how often someone will cite their refi rate without reference to the APR, especially with the depth of experience on this board. A borrower can pick from a variety of rates if theyíre willing to pay or cash out at closing. Comparing APRs puts things on a nearly even basis.
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Old 08-07-2020, 07:14 PM   #24
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Update: Itís been a few months since my first post and Iím pretty sure Iím going to pull the trigger on paying off mortgage next week.

As a refresher: I have about 40% of my net worth in cash and this uses about 40% (375k) of that to pay off the mortgage. And it still leaves me with the other 20% in case the market takes a tumble. Iím about 40/20/40 before this.

I guess last few months I kept comparing it to BND which yields 2.5%. comparing post tax for the two.

BND - 2.5%*(1-.25) =1.875% post taxes
Pay mortgage @ 3.75% ó>> 3% after tax deductions
So, 3%/(1-.25%) = 4% post tax equivalent.

So itís better by 2.125% or about $7970 a year, and with rates at historic lows the upside of BND doesnít seem great vs the downside.

I hate losing the liquidity but itís certainly the right thing to do for me since I figure Iíll get a lot of this back slowly since DW and I are still banking plenty of cash (10k+) each month from our J@bs.

Am I missing something? Let the collective wisdom speak now or forever have me make a mistake.
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Old 08-07-2020, 08:13 PM   #25
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With my background in real estate, loans, and appraisal, I can probably think of lots of decent reasons to have our home financed, especially at these rates. But, we really love having a paid off house. We sleep better in a paid off house. And we havenít ever (yet) felt like it was any kind of mistake. It occupies a different and unique part of our investment portfolio. A part we donít fiddle with. A part that canít be figured out with a calculator. My wife figures if everything else goes to he!! in a hand basket, we will still have a nice home on a river in Montana that suits us perfectly. I think you are smart and ready!
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Old 08-07-2020, 11:04 PM   #26
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Originally Posted by Retireby45ish View Post
.. this uses about 40% (375k) of that to pay off the mortgage. ....

BND - 2.5%*(1-.25) =1.875% post taxes
Pay mortgage @ 3.75% ó>> 3% after tax deductions
So, 3%/(1-.25%) = 4% post tax equivalent.

..
Out of interest, when you calculated your mortgage deduction, did you adjust it for the portion that has no deduction effect compared to standard deduction ?

Simple example:
Person pays property tax of 10K , and 14K in mortgage interest. So thinks they are "saving" money on the mortgage interest due to the deduction.

However, instead, they could claim the standard deduction of 24.4K, so really the mortgage deduction is totally worthless as is more than replaced by the standard deduction.
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Old 08-08-2020, 08:55 PM   #27
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With my background in real estate, loans, and appraisal, I can probably think of lots of decent reasons to have our home financed, especially at these rates. But, we really love having a paid off house. We sleep better in a paid off house.
Interesting. I have 3 houses. One is paid off, one has a small (recently recast) mortgage, and one has a high end of conventional mortgage. We sleep pretty much the same in each of them. I think it has more to do with the bed than the mortgage.
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Old 08-09-2020, 07:37 PM   #28
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Out of interest, when you calculated your mortgage deduction, did you adjust it for the portion that has no deduction effect compared to standard deduction ?

Simple example:
Person pays property tax of 10K , and 14K in mortgage interest. So thinks they are "saving" money on the mortgage interest due to the deduction.

However, instead, they could claim the standard deduction of 24.4K, so really the mortgage deduction is totally worthless as is more than replaced by the standard deduction.

I did look into this. I believe it was slightly more advantageous to itemize compared to standard deduction. Then I looked at the difference between having that mortgage interest item on there and not (and still itemizing). I took that amt and subtracted that from my payments to get my rate.

Thatís how i got the 3.75% APR rate down to something closer to 3%. But still beats anything i can do to get an after tax profit of 3%. Especially since I know Iím leaving in a year or two.
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Old 08-14-2020, 10:33 AM   #29
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Looks like it's going to get more expensive to refi in a couple of weeks, if this actually happens. It's pretty annoying, as I've got a refi in the works that won't be completed before this goes into effect.

A ĎMiddle Fingerí to Struggling Families: How a New Fee Is About to Make Refinancing Your Mortgage a Lot More Expensive

Quote:
On Wednesday night, mortgage purchasers Fannie Mae and Freddie Mac, informed lenders that, starting in about two weeks, they will be adding a 0.5% fee when buying refinance mortgages. Known as an Adverse Market Refinance Fee, the charge is meant to offset the risks and expenses the firms say they have taken on due to the coronavirus pandemic. The costs of the new will surely be passed onto consumers, either in the form of higher closing costs or higher mortgage rates, experts say.
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Old 08-14-2020, 10:51 AM   #30
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Looks like it's going to get more expensive to refi in a couple of weeks, if this actually happens. It's pretty annoying, as I've got a refi in the works that won't be completed before this goes into effect.

A ĎMiddle Fingerí to Struggling Families: How a New Fee Is About to Make Refinancing Your Mortgage a Lot More Expensive

Iím going to pay it off. Made sense for me.
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Refinance or pay off mortgage?
Old 08-14-2020, 02:38 PM   #31
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Refinance or pay off mortgage?

The article seems to have disregarded the fact that the fee only applies to cash out refi loans.

https://singlefamily.fanniemae.com/media/23726/display

Edit: I am in the middle of a limited cash out refi myself. I expect it to close any day now and lender will absorb any additional fees if this loan is even affected. I presume there are several alternatives for loans that are in process. The cash outlay for us is not a dealbreaker.
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Old 08-14-2020, 10:06 PM   #32
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Good. Thanks. You're right, the article I read (and another one) neglected to mention that minor aspect. I'm not doing a cash out refi, so I can breath a sigh of relief. Not that it would have stopped me, but another two grand in closing costs for no reason would have been a pisser.
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Old 08-31-2020, 01:00 PM   #33
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I had to look this post up. My refi closing has been delayed. Lender says they will re-lock or reduce rate, whichever benefits me the most. No mention of the new fee. Iím seeing several conflicting details on the new fee. It was hastily put together. The link I posted above was updated on 8/27 and the new effective date is 12-1-20.
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Old 08-31-2020, 03:35 PM   #34
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Originally Posted by jazz4cash View Post
The article seems to have disregarded the fact that the fee only applies to cash out refi loans.

https://singlefamily.fanniemae.com/media/23726/display

Edit: I am in the middle of a limited cash out refi myself. I expect it to close any day now and lender will absorb any additional fees if this loan is even affected. I presume there are several alternatives for loans that are in process. The cash outlay for us is not a dealbreaker.
I think the reason they disregarded it is that almost all refinances are limited cash out or cash out refinances. The limited cash out allows them to not have to get everything to the penny. The cash out you can get is very limited. It isn't there to give you money from equity but so they don't have to figure it all to the penny which can be difficult.

I refinanced my house in March. Now the rates are less. Not quite low enoough to make it sensible to pay the cost to refinance again. But, I had been thinking that if it went down another quarter point it might work. But with an extra half point added then it would not be economical at all. Whether it would be even possible to get a total non-limited cash out refi is uncertain.
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Old 08-31-2020, 04:14 PM   #35
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I think it would be easy if you could write a check at closing. As you suggest the exact amount may not be known until a day or so before closing but worst case would be +/- 30 days interest. This is what Iíd do if they were going to add the new fee to my loan. As it is they assume everybody wants to roll closing costs into the loan and it pumps up the principle a bit so there s an incentive for them. With the extended delay to get my loan closed Iím looking at an increasing pile of cash to borrower since we are continuing to pay down current loan.
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Old 09-19-2020, 04:46 PM   #36
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I had to look this post up. My refi closing has been delayed. Lender says they will re-lock or reduce rate, whichever benefits me the most. No mention of the new fee. Iím seeing several conflicting details on the new fee. It was hastily put together. The link I posted above was updated on 8/27 and the new effective date is 12-1-20.
I'm still waiting to close....it's been 90 days since my application was accepted. It's getting annoying so I guess I need to start calling them everyday.
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