The Home Improvement Thread

[hutch]

https://www.bloombergquint.com/onweb/danes-get-20-year-0-mortgages-as-interest-rates-keep-sinking

[ye-ole-hatch ıll|̲̅̅●̲̅̅|̲̅̅=̲̅̅|̲̅̅●̲̅̅|llıl]

check out these masterclass carpentry skills!

[vansmack]

but if people are not refinancing their loans, they are leaving money on the table (unless they were already at a low 3% rate)
I basically spent 3-5 hours of work and now am getting 1.5 months of mortgage for free a year, for the life of this loan

Did you run numbers on paying half your mortgage every two weeks instead of refinancing? 

Our rate is in the mid-3's and by budgeting an any every-two-week payment instead of a monthly payment, there was more long term savings to be had by structuring our payments that way rather then paying the refinance fees and looking for 1.5 less payments a month.  Over the last 25 years of the mortgage by paying 2 extra month of the mortgage per year, the savings are well into 6 figures and more than the savings from a lower rate (plus re-fi fees). 

As you said, especially while the interest rates on savings are so low, no sense paying less when paying more can save more money in the long run.     

[hutch]

Gets popcorn....

[Space Freely]

but if people are not refinancing their loans, they are leaving money on the table (unless they were already at a low 3% rate)
I basically spent 3-5 hours of work and now am getting 1.5 months of mortgage for free a year, for the life of this loan

Did you run numbers on paying half your mortgage every two weeks instead of refinancing? 

Our rate is in the mid-3's and by budgeting an any every-two-week payment instead of a monthly payment, there was more long term savings to be had by structuring our payments that way rather then paying the refinance fees and looking for 1.5 less payments a month.  Over the last 25 years of the mortgage by paying 2 extra month of the mortgage per year, the savings are well into 6 figures and more than the savings from a lower rate (plus re-fi fees). 

As you said, especially while the interest rates on savings are so low, no sense paying less when paying more can save more money in the long run.     

Would that kind of philosophy work as well on a mortgage where one has 9-10 years left on a 15 year mortgage?

[Julian, Forum COGNOSCENTI]

Did you run numbers on paying half your mortgage every two weeks instead of refinancing?

...

Over the last 25 years of the mortgage by paying 2 extra month of the mortgage per year,

How is 1/2 a mortgage payment every 2 weeks "2 extra month of the mortgage per year"? 26 1/2 payments = 13. What am I missing?

[ye-ole-hatch ıll|̲̅̅●̲̅̅|̲̅̅=̲̅̅|̲̅̅●̲̅̅|llıl]

well I always pay a little extra on the principal with payment, but wouldn't say that I averaged out to one full month payment EOY (maybe half a payment)
But you are right, paying extra monthly makes a big difference as once you pay over the payment, that goes directly to the principal

That type of payment plan works out great if you get paid bi-weekly, I get paid twice a month (and have for a while now)
But when I did...used to love it when you had two months a year where you got 3rd paycheck.  May debt paydowns or wild weekends were had with those magical 3rd paychecks

I know for a fact that my refi has me paying almost $100k less in interest over the life of the loan and I'm paying $320 less a month
Now if I took that savings and paid the same amount, that could easily shave 5 years off my loan too...but money is tight and that $320 is actually making a difference


Honestly, you could refi at the lower rate AND pay every two weeks...then you'd save millions, I tell you, Millions!
I mean if we are being honest, don't get a loan and pay cash, then you really make out...but only Julian can do that
That is by far one of the most depressing moments when they show you that page that says you basically are paying Double for your loan

also, for the last two tax years...I didn't even get to write off my mortgage interested...Thanks Trump
the new standard deduction is so high.   So people should think twice when they factor in mortgage interest deduction into their 'savings' on owning a home

[ye-ole-hatch ıll|̲̅̅●̲̅̅|̲̅̅=̲̅̅|̲̅̅●̲̅̅|llıl]

How is 1/2 a mortgage payment every 2 weeks "2 extra month of the mortgage per year"? 26 1/2 payments = 13. What am I missing?

he does have a point...but one full month worth of principal payment can have a big impact
but I can see why if he used that math the savings was better than taking a point off his loan

Space, there are calculators out there and you can put in what you owe and your term
then you can see how many years you will take off your loan by adding extra payments
guaranteed paying extra every month will save you money in the long run, no doubt about it

here is the key part of smakie's proposal too

there was more long term savings to be had 

So lowering monthly payments was not a concern in the smakie home, wish I could say that was the same for me
I actually increased my term (only a year) and increased my loan by wrapped in the closing costs (so also 'skiped' a whole months payment too)
between that and the stimulus check, it was a good month in the Hatchhold

[vansmack]

How is 1/2 a mortgage payment every 2 weeks "2 extra month of the mortgage per year"? 26 1/2 payments = 13. What am I missing?

Sorry, I should have been more clear here.  It's not quite two months (but pretty close) with the interest saved by making more frequent payments over the equivalent of a year, in addition to making the ACTUAL extra payment.

That type of payment plan works out great if you get paid bi-weekly, I get paid twice a month (and have for a while now)

Yes, a benefit of me and the Mrs being on different pay schedules.  I'm monthly, she's every two weeks (salary). I don't exactly know when her commission is paid.

I know for a fact that my refi has me paying almost $100k less in interest over the life of the loan and I'm paying $320 less a month

Yes, but did you factor in origination fee (~1.5% of the loan) and costs?  And I assume those costs were rolled back into the mortgage?  This is where I realized that the money saved in interest, minus total closing costs, was not a cheaper alternative to keeping my current loan but just paying more.  EVEN if I did both.  I will revisit this when the loan amount is reduced and the closing costs are lower.  That was the crux of my original question. 

but money is tight and that $320 is actually making a difference

Well, this of course makes a huge difference.  I only asked because you mentioned that keeping money in the bank was a losing proposition at the moment and the market has been going gang busters...seemed as though you were looking for alternatives.

I mean if we are being honest, don't get a loan and pay cash, then you really make out...

Not true.  Money is cheap right now and you SHOULD take advantage of it, so long as you can make more money else where.  Do you have enough money for the new car?  Sure.  But if you are given a zero percent loan and can make 3% with the money elsewhere, that is something you should do.

also, for the last two tax years...I didn't even get to write off my mortgage interested...Thanks Trump
the new standard deduction is so high.   So people should think twice when they factor in mortgage interest deduction into their 'savings' on owning a home

We lose ~$11k in mortgage and property tax deductions annually with the new tax bill.  Another reason why we won't consider selling as were grandfathered in and would lose even more if we moved!  So that with the other deductions we're no longer allowed to take because of the cap are painful.

[vansmack]

Would that kind of philosophy work as well on a mortgage where one has 9-10 years left on a 15 year mortgage?

I find it hard to believe that a data analyst for the Federal Government doesn't know his way around a spreadsheet to calculate and compare, but OK. 

Google Docs has many pre-populated spreadsheets to compare the two.  Many web sites will also do the same.... 

[hutch]

Hmmm... I think I heard that one before

But where?

[hutch]

Financial gurus of the board,

So we planned to refinance at 2.625 but the lender is saying they will simply lower the rate to 2.625 and we then have no closing costs

So at that point one isn’t refinancing and the term of the loan would not extend

I think we are going to go with this

Keep in mind we are happy with our lender and aren’t going to refinance anywhere else

On the plus side we pay off loan earlier and save closing costs

The downside is our monthly payment  will still go down substantially but not as much as would be the case under a refi...about $175 less
Make sense?
Thoughts?

PS note my partner handles all this stuff.. I just tell her to refinance or what have u you! I am completely useless

[evilizac]

   How does one negotiate that? We're sitting at 3.79% and the loan is in my wife's name (bought before we married) and she's kind of sitting on her hands about refinancing because she's not particularly versed in economic concepts. I've tried explaining inflation on several occasions for her to say, "as long as I can buy what I want I don't care". She also, for some reason wants to refi with Bank of America because she believes (because of one anecdote from a colleague) that they won't sell off our loan like ours has been sold three times in the past five years. So we sit at 3.79%. . .
   Oh and we're re-shingling half of our roof, cool, goodbye $3,000.00.   

[grateful]

Most of the savings on a refinance comes from extending your debt out to 30 years,  not from the difference in the interest rate.

Your offer is a no-brainer - do it immediately  - but you aren't going to see a dramatic reduction in monthly payments.

[hutch]

   How does one negotiate that? We're sitting at 3.79% and the loan is in my wife's name (bought before we married) and she's kind of sitting on her hands about refinancing because she's not particularly versed in economic concepts. I've tried explaining inflation on several occasions for her to say, "as long as I can buy what I want I don't care". She also, for some reason wants to refi with Bank of America because she believes (because of one anecdote from a colleague) that they won't sell off our loan like ours has been sold three times in the past five years. So we sit at 3.79%. . .
   Oh and we're re-shingling half of our roof, cool, goodbye $3,000.00.   

Well we did all the paperwork for the refi and they sent us this letter very quickly with the offer to just lower rate

I don’t think we would have gotten offer without having done all the paperwork... not sure if this letter was sent because our application was strong or what

In this case it’s a well known credit union


If you are currently at 3.79 it’s a great time to refinance...

I didn’t think Bank of America was particularly great but I am fairly clueless