Closing on our refi tomorrow

[maat55]

Perhaps, but maybe I'm just looking at it differently. Yes, we paid a total of about $4,000 in closing costs between what we brought to the table and what got added to the loan amount. That will take about 6.3 years to make up through the lower payment. But don't you also have to account for what money will be returned to us when the old loan gets closed out?

In our case, we will get back what is in our escrow account currently - about $2,200. We will also get back about $2,000 because the payoff figure used by Quicken was calculated before we made our November payment. So in the end, in a week or two we will get back that same $4,000 or even a couple hundred more than what we spent in closing costs. And from this point on, we'll be enjoying the lower payment and shorter term. Maybe I'm being dense but I don't really see the downside or why this wasn't worth doing.

Did you pay 2000 towards principle in one month?

[rplayman]

No you wouldn't take into account that money at all. That was your money whether you refinanced or not. The fact that they had an extra $2200 of yours in an escrow account also explains why I would not escrow. Either way, your break-even for that new loan in 6 years. If you move before then, you are in worse shape because of the refinance. I hope you don't move and it works out for you.

[maat55]

No you wouldn't take into account that money at all. That was your money whether you refinanced or not. The fact that they had an extra $2200 of yours in an escrow account also explains why I would not escrow. Either way, your break-even for that new loan in 6 years. If you move before then, you are in worse shape because of the refinance. I hope you don't move and it works out for you.

Depends on whether part of the 4000 was to cover the 2200.

[disneysteve]

Depends on whether part of the 4000 was to cover the 2200.

Yes, part of the costs were to fund the new escrow account. Part of the costs were to payoff the loan based on the payoff figure they had pulled when we applied. The $2,200 in escrow is a wash because we put $2,200 into the new account and will get back $2,200 from the old account. That's why I don't think that really counts as a closing cost that needs to be made up. As for the payoff, as I said I made our November payment after they pulled the payoff figure. And yes, I did pay a lot over the required payment. My thought was that would reduce the amount we'd need to borrow with the new loan and further reduce our payment but closing happened so quickly that Quicken didn't pull a new payoff figure. They just used the one they already had. So the principal that was paid with the November payment will get returned to us once the payoff happens because the amount needed to settle that loan is now lower than what they anticipated.

[safari]

I also refinanced last month. I went with 4.375% 30-years fixed. I had 23 years left, and I could get 3.75% APR for 15 years, but I decided that I'd rather lengthen the term and have the option of paying less than being locked into a higher payment. With the interest being so low, I actually prefer paying the minimum payments and saving/investing the money instead of locking it in the equity. I'd like to buy a second house in 3-5 years, and the chances are that the interest rates will be a lot higher then, so it would help if I could make a larger downpayment, using the money I saved by paying minimum on the current mortgage.

[disneysteve]

With the interest being so low, I actually prefer paying the minimum payments and saving/investing the money instead of locking it in the equity.

This is exactly my dilemma now. On the existing loan, we were making pretty aggressive extra payments. Now that the rate is down to 4%, doing that isn't such an easy decision now. I do want to retire this loan early but I think what we'll do is put some extra money toward the loan and the rest into additional accessible investments. Our daughter will start college in under 4 years so building up some money in addition to her 529 is probably a good idea. Plus, we are both driving cars with 130,000 miles that will need to be replaced at some point.

[Hector]

I also refinanced last month. I went with 4.375% 30-years fixed. I had 23 years left, and I could get 3.75% APR for 15 years, but I decided that I'd rather lengthen the term and have the option of paying less than being locked into a higher payment. With the interest being so low, I actually prefer paying the minimum payments and saving/investing the money instead of locking it in the equity. I'd like to buy a second house in 3-5 years, and the chances are that the interest rates will be a lot higher then, so it would help if I could make a larger downpayment, using the money I saved by paying minimum on the current mortgage.

I am curious! Why would you buy a second house?
I doubt that you would buy it for investment as you seem smart and are making more on your other investments than interest rate from your mortgage.

[safari]

I am curious! Why would you buy a second house?
I doubt that you would buy it for investment as you seem smart and are making more on your other investments than interest rate from your mortgage.

I am supporting my parents, who are currently living in my house. I'd like to leave this house to my parents and buy a house for myself and my future family.

[Hector]

I am supporting my parents, who are currently living in my house. I'd like to leave this house to my parents and buy a house for myself and my future family.

Bravo on supporting parents!
Great job dude.

[maat55]

I am curious! Why would you buy a second house?
I doubt that you would buy it for investment as you seem smart and are making more on your other investments than interest rate from your mortgage.

Deleted....

[wincrasher]

Looking thru the listings on Realtor.com, it's appalling to see the state of many of the homes.
Terrible furnishings, or no furniture, no drapes or artwork. Many people living in expensive homes with the old junk from their apartments. God forbid they ever planted a plant, painted a fence or treated a deck.

Many people just were of the mindset to be placeholders for these homes, that they would cash in in a few years when the value went up. In the meantime, just make repairs if it's an emergency.

I've been of the mind that condition is equally as important as location. I'm always touch-up painting, polishing and cleaning things - this weekend I'm pressure washing the exterior. Then there are all the improvements you can make - like extra shelves, cabinets, etc, that can make your home a better place to live and maybe set you apart from the others. All that costs money above and beyond the typical inevitable repairs and maintenance.

All part of the responsibility of owning a home, or any building for that matter.

[gattaca]

I just contacted Quicken Loans today. They gave me a great rate but I have concerns about the info they put into the documents they sent me to sign. I asked the loan agent about it and he said that he would verify and correct anything before the closing. But I don't want to sign these documents that have false info on them.

[disneysteve]

I just contacted Quicken Loans today. They gave me a great rate but I have concerns about the info they put into the documents they sent me to sign. I asked the loan agent about it and he said that he would verify and correct anything before the closing. But I don't want to sign these documents that have false info on them.

What type of false information is on the forms? Certain things like actual closing costs, payoff figure, escrow amounts and such can't be accurate until right before closing (and sometimes not even then).

[Slug]

Congrats on the re-fi! My new payments just kicked in. Delightful to have no HELOC or escrow now.

In terms of the accelerated payment debate, I'm still making 13 payments per year, but I struggle when my effective rate is just over 3%, and I could do better than that with a variety of solid dividend stocks. With this payment, I'll end up paying it off before I'm 65, but I'd like to be done sooner. Once my wife starts working again this should be easily attainable.

[nick__45]

Looking thru the listings on Realtor.com, it's appalling to see the state of many of the homes.
Terrible furnishings, or no furniture, no drapes or artwork. Many people living in expensive homes with the old junk from their apartments. God forbid they ever planted a plant, painted a fence or treated a deck.

Many people just were of the mindset to be placeholders for these homes, that they would cash in in a few years when the value went up. In the meantime, just make repairs if it's an emergency.

I've been of the mind that condition is equally as important as location. I'm always touch-up painting, polishing and cleaning things - this weekend I'm pressure washing the exterior. Then there are all the improvements you can make - like extra shelves, cabinets, etc, that can make your home a better place to live and maybe set you apart from the others. All that costs money above and beyond the typical inevitable repairs and maintenance.

All part of the responsibility of owning a home, or any building for that matter.

Stop making fun of us poor folks.

Actually, being responsible is to not furnish your house as soon as you move it. For your other posts, I have you probably make decent money and have finer taste and probably an established image to keep. While I make very good money now, I consider myself broke and my relatives label me el cheapo zippo dinero. I don't care because it is cheaper to be not like by them, who expect constant feeding/handout to the tune of $5k per year from any relative in the U.S. and Europe. I think I gave them 500 total in the last 10 years so that they would humiliate me on my wedding day. And they scam me on the wedding cost too but that's another story. So the last time they got anything from me was 2003 and I am keeping it that way. One of them is here on a visit and got 12 bucks from my wife in term of gift and 23 bucks in term of gas, which I had to pump into my parents' van to take them out. That's 35 dollars that I could use to stock up on ammo or MRE.

We are very picky with furniture and had no, I repeat: NONE, furniture while living at the apartment. We had no place to seat to eat, no chair, no TV, and sometime I thought we lived like rats. Then we bought a big house, older design built in 1990 before they went with open-space design, which is nice but I don't think they are that well built. We bought 2 pieces of furniture so far. And still no TV. Before I traded my pistol for a nice $4k sofa, we sat on the floor and stand around the island to eat. Now we seat on that wrap-around and watch hulu or youtube. And we bought a nice dual leaf dinning table from a consignment store, which we do use like some folks that never touch theirs. We paid 700 dollars for it and the previous price tag was 2500, according to the old receipt that came with it. We probably could get it for 500 dollars if we waited but we also would loose it to another buyer. A lot of people frequent that place because of pricing scam where they list the price of each item of the current week as well as future week. So people would see something they like and try to beat out other buyer by buying it right before the lowest price sets in. We refuse to stop in that place because the sale people are real con-artists. It would be nice to catch the owners of the furniture as they bring it to the store and buy it from them directly and get free delivery since they already have the truck and trailer right there and I live only 2 miles away.

We're been in here for less than 13 months and had paint the 3-decker deck (very expensive and time consuming), replace the columns and rails on the front porch. We went all out with the biggest columns Hope Depot had and had to do custom work on the rails. It cost the same for labor so we just paid the difference in parts. It makes the house looks very nice. The house was painted before we moved in but I think they used cheap paint in some areas. Since we only reside in one room, we don't worry about it. My wife did paint our daughter room pink against my wishes. I want standard white throughout and more concern with shelves, cabinet, etc. than painting. We are saving money to have built-in furniture installed throughout the house. Time is tough and I am an idiot when I was younger, I am still a kid and not as stupid as before, but I am paying the price now instead of living large and spending without a car like people in my old neighborhood. I drove there last week because my buddy just bought a house there and everyone has at least one nice car out front. There are a few 2 story/split-foyer houses there now but 98% are still one level rambler of 1200 sq-ft, which is actually my ideal size, and everyone drives something fancy. Average family income is $30k and they drive new cars. Go figure. I notice a few people that always had money moved out of their better kept rambler and possibly into big subdivision in another county and their old place is a mess now with renters and lower gene pool owners. But they still have nice cars.