Rep Retirement Lodge #13^2: Independence!

[goldy_331]

Re: Rep Retirement Lodge #13^2: Independence!

Hi Lodge. Happy Monday! Off from work today. I had my annual physical this morning. Went well. I also used it as a pre-op appointment as I am having some minor surgery on my foot at the end of July. It's hazy, hot and humid today so I will probably sit out by the pool for a bit this afternoon.

I took the time here at home with no work distracting me to call my mortgage company. I need to re-finance. Rates are starting to go up and I am kicking myself for not making this call earlier this year. So I need some advice....

I have 22 years left of a 30yr fixed. I can do two things:

1. Take out a 15 yr mortgage. Rolling in all fees, etc. to the mortgage, my monthly payment will increase about $218 but over the course of the loan, I will save over $100K. Or I could put some money towards to principal to lower the amount I finance and my monthly payment goes up about $150.

2. Take out a 20 yr mortgage. Rolling in all fees, etc., monthly payment goes down $11/month. Or I could put the same amount towards the principal and my monthly payment will go down about $45. Over the course of the loan I will save over $45K.

I know I have to make the decision about whether I want to pay off less over a shorter amount of time vs. paying less every month. I see the numbers of how much I will save paying it back over the life of the loan, which is substantial, but then I try to determine if I can swing the extra money per month. That's almost an additional $2500 a year. Everybody's situation is different, but for those homeowners on the board, I'd love to get some feedback on this. Also, what are my tax implications? Hammer - any thoughts on that? When I got my taxes done this year my accountant was like "So next year when we meet you will have re-financed, right?????"

I can't comment on the tax situation. What I can say is that it is often better, if you have the discipline, to go with a longer term loan but still make extra payment against the principal. We did this with our most recent mortgage and paid it off well ahead of time, saving a bundle. Going with the lower payment and longer term freed us up in case anything happened (like one of us losing a job) where we'd be hard pressed to handle the higher payment.

 

[mookie1995]

Re: Rep Retirement Lodge #13^2: Independence!

S'upp y'all

Hope to get car back this week (late tues/early wed)

 

[hockeyplayer1015]

I can't comment on the tax situation. What I can say is that it is often better, if you have the discipline, to go with a longer term loan but still make extra payment against the principal. We did this with our most recent mortgage and paid it off well ahead of time, saving a bundle. Going with the lower payment and longer term freed us up in case anything happened (like one of us losing a job) where we'd be hard pressed to handle the higher payment.

I'm new to the home ownership land (1 year coming up!) but I agree with this. I'm in a 30 year, but paying an extra $400 a month on principle, so it is pretty much the same as paying it off as a 15 year. But should anything happen, I can easily knock that $400 off the expense list.

 

[bigblue_dl]

Re: Rep Retirement Lodge #13^2: Independence!

It would be nice to refinance, if any of the ****ing mortgage companies would give me a mortgage.

 

[goldy_331]

Re: Rep Retirement Lodge #13^2: Independence!

It would be nice to refinance, if any of the ****ing mortgage companies would give me a mortgage.

Well, if you weren't such a dam deadbeat....

 

[bigblue_dl]

Re: Rep Retirement Lodge #13^2: Independence!

Well, if you weren't such a dam deadbeat....

They claim I own a 0 bedroom house. I have 3 bedrooms.

 

[Scarlet]

Re: Rep Retirement Lodge #13^2: Independence!

I can't comment on the tax situation. What I can say is that it is often better, if you have the discipline, to go with a longer term loan but still make extra payment against the principal. We did this with our most recent mortgage and paid it off well ahead of time, saving a bundle. Going with the lower payment and longer term freed us up in case anything happened (like one of us losing a job) where we'd be hard pressed to handle the higher payment.

Interesting thought. I think if I went with the 20yr and try and do what you did I might pay it off in 15 while still having extra cash every month.

 

[state of hockey]

They claim I own a 0 bedroom house. I have 3 bedrooms.

Is that because of no fire escapes in the basement?

 

[walrus]

Re: Rep Retirement Lodge #13^2: Independence!

I did a bi-weekly mortgage, pay every 2 weeks, worked great for me, saved a ton of interest

 

[bigblue_dl]

Re: Rep Retirement Lodge #13^2: Independence!

Is that because of no fire escapes in the basement?

Nope. All three bedrooms have legal egress windows, but since they are "below grade" the mortgage companies and appraisal companies refuse to count them as bedrooms. It is completely asinine, because they are legal bedrooms. I have no idea what kind of backwards logic these fools are using.

 

[West Texas Wolverine]

Re: Rep Retirement Lodge #13^2: Independence!

Hi Lodge. Happy Monday! Off from work today. I had my annual physical this morning. Went well. I also used it as a pre-op appointment as I am having some minor surgery on my foot at the end of July. It's hazy, hot and humid today so I will probably sit out by the pool for a bit this afternoon.
I took the time here at home with no work distracting me to call my mortgage company. I need to re-finance. Rates are starting to go up and I am kicking myself for not making this call earlier this year. So I need some advice....
I have 22 years left of a 30yr fixed. I can do two things:
1. Take out a 15 yr mortgage. Rolling in all fees, etc. to the mortgage, my monthly payment will increase about $218 but over the course of the loan, I will save over $100K. Or I could put some money towards to principal to lower the amount I finance and my monthly payment goes up about $150.
2. Take out a 20 yr mortgage. Rolling in all fees, etc., monthly payment goes down $11/month. Or I could put the same amount towards the principal and my monthly payment will go down about $45. Over the course of the loan I will save over $45K.
I know I have to make the decision about whether I want to pay off less over a shorter amount of time vs. paying less every month. I see the numbers of how much I will save paying it back over the life of the loan, which is substantial, but then I try to determine if I can swing the extra money per month. That's almost an additional $2500 a year. Everybody's situation is different, but for those homeowners on the board, I'd love to get some feedback on this. Also, what are my tax implications? Hammer - any thoughts on that? When I got my taxes done this year my accountant was like "So next year when we meet you will have re-financed, right?????"

I'm a believer in the 15 year. If you can afford it, I say do it. It's a rare person that pays a 30-year off in 15. Instead of actually paying the double principal every month, something always seems to come up. Pretty soon, two extra payments in a row go missing, then you've formed a habit!

Of course, you'll have less mortgage interest to deduct, but the money you're saving in interest far outweighs the amount of any tax refund dollars lost.

I also find it helpful to compare the amount of principal and interest you'd be paying with your first payment. My guess is that a 30-year will be something like 10% principal and 90% interest. A 15-year payment with be closer to 50/50 (maybe better, at today's rates), and the principal portion will only get better from there. That $218 per month you'll save on a 30-year will be more than lost in extra interest you're paying every month.

 

[West Texas Wolverine]

Re: Rep Retirement Lodge #13^2: Independence!

One other advantage of the 15-year: If you move in 4-5 years (the national average of time spent in a home), you'll have paid off far more in principal with a 15-year, so you'll have more equity. This is true when compared to a 30-year, even if you've been paying extra principal each month on that 30-year.

 

[St. Clown]

Re: Rep Retirement Lodge #13^2: Independence!

I'm a believer in the 15 year. If you can afford it, I say do it. It's a rare person that pays a 30-year off in 15. Instead of actually paying the double principal every month, something always seems to come up. Pretty soon, two extra payments in a row go missing, then you've formed a habit!

Of course, you'll have less mortgage interest to deduct, but the money you're saving in interest far outweighs the amount of any tax refund dollars lost.

I also find it helpful to compare the amount of principal and interest you'd be paying with your first payment. My guess is that a 30-year will be something like 10% principal and 90% interest. A 15-year payment with be closer to 50/50 (maybe better, at today's rates), and the principal portion will only get better from there. That $218 per month you'll save on a 30-year will be more than lost in extra interest you're paying every month.

MS Excel has a Loan Amortization found within the Spreadsheet Solutions table of the Insert Worksheet option. To find this, right-click on one of the worksheet tabs (any of them where it reads "Sheet1", "Sheet2", etc.), and select Insert from the list. This will bring up the Insert window. The two tabs are General and Spreadsheet Solutions, General is the default option.

While I've never used it for an exhaustive analysis of a loan, there is an option for early payments and optional extra payments. The reason I bring this up is that any extra payments you make against the loan will reduce the principal, and thus accelerate the amortization schedule for your normal payments, which will reduce the amount of interest paid.

 

[bigblue_dl]

Re: Rep Retirement Lodge #13^2: Independence!

Bonfire at my place, Saturday, in case I missed anyone in the Twin Cities that would want to come out and drink beer/play with fire.

 

[Greyeagle]

Re: Rep Retirement Lodge #13^2: Independence!

Nope. All three bedrooms have legal egress windows, but since they are "below grade" the mortgage companies and appraisal companies refuse to count them as bedrooms. It is completely asinine, because they are legal bedrooms. I have no idea what kind of backwards logic these fools are using.

We couldn't get a mortgage for our lake place because it didn't have a furnace. Actually turned out better for us as we used a combo of refinancing our home and selling stock to pay cash, thus avoiding a lot of pesky nitpicking from a mortgage company & the county.

 

[Hammer]

Re: Rep Retirement Lodge #13^2: Independence!

I know I have to make the decision about whether I want to pay off less over a shorter amount of time vs. paying less every month. I see the numbers of how much I will save paying it back over the life of the loan, which is substantial, but then I try to determine if I can swing the extra money per month. That's almost an additional $2500 a year. Everybody's situation is different, but for those homeowners on the board, I'd love to get some feedback on this. Also, what are my tax implications? Hammer - any thoughts on that? When I got my taxes done this year my accountant was like "So next year when we meet you will have re-financed, right?????"

The most obvious is, your mortgage interest deduction will go down. As for going 15 vs 20 year, evaluate the difference between interest rates. If they're the same, the no-brainer is the 20 year. If they're willing to loan you money in the 4% neighborhood (or lower) for the next two decades, by all means.

 

[Scarlet]

Re: Rep Retirement Lodge #13^2: Independence!

Does anyone here ply those games on Facebook? Like Candy Crush or Bubble Safari? And if you do, do you have specifically send invites to all your other Facebook friends or is there some program that annoyingly does it for you? Because I have received so many invites in the last couple of days and I really can't believe my friends are specifically sending all of them out.

 

[Hammer]

Re: Rep Retirement Lodge #13^2: Independence!

I've had three friends send me about a dozen invites for Candy Crush.

 

[JF_Gophers]

Does anyone here ply those games on Facebook? Like Candy Crush or Bubble Safari? And if you do, do you have specifically send invites to all your other Facebook friends or is there some program that annoyingly does it for you? Because I have received so many invites in the last couple of days and I really can't believe my friends are specifically sending all of them out.

you have to tell it who to invite via fb. It won't do it without the person allowing it.

 

[gmann]

I can't comment on the tax situation. What I can say is that it is often better, if you have the discipline, to go with a longer term loan but still make extra payment against the principal. We did this with our most recent mortgage and paid it off well ahead of time, saving a bundle. Going with the lower payment and longer term freed us up in case anything happened (like one of us losing a job) where we'd be hard pressed to handle the higher payment.

This is pretty good advice.

If the crystal ball shows any potential issues with cash flow then go with the most comfortable payment. If the fees and rates are comparable go with longer term. As long as there are no prepayment penalties you can always make extra principal payments and knock out quicker. (On a typical 30 year mortgage making 13 payments of year will knock about seven years off the life of a mortgage.) not sure of your tax situation but I doubt it's a factor worth considering, could be wrong though. Most importantly, anytime you can give the bank less of your money then the better off you are.

I refinanced my mortgage a few months ago and I refinanced about 13 months before that. Even with additional closing costs I came out way ahead to lower my term and rate.

Rates are still decent but the trend is for them to go up versus down IMHO. Not a mortgage but we just bought two vehicles a couple weeks ago. Both 36 months at .90 %.