Started my refinance today

[RearAdmiral]

OP:
Purchased in 2013. Going to go from 30 year 4.875% to 15 year 3.250%. Payment will go up like $80 lol. Many savings will be had. What a crock the mortgage industry is. I can see how people get caught in mortgages forever and never come out ahead. The loan amount is less than my yearly salary now! Hurray for foreclosures.

Now I'll be able to put my extra money in investments instead.

Putting update post from 2/4 here as well:

We closed on the refinance 2/4. Now just waiting to see who the mortgage gets sold to. My principal amount applied more than doubled(roughly 200 to over 400) while my mortgage went up 80/month.

I am paying $20 LESS a month then when I first started in 2013(PMI/30 year and such). As I said before, mortgages and interest can suck my balls. This one isn't quite so bad though.

 

[microAmp]

I did something like that a few years back. From a 6.375% 30 year (about 25 left) to a 4.375% 15 year. I can't remember how much the bill went up or not but so small it didn't matter like your $80 one.

Best part, for me, at least $70,000 in interest saved; if my memory serves me right.

 

[Zivic]

I'm selling my previous house, if the buyer actually follows through... closing 1/14... cannot wait to stop making the payments on it. I cannot stand mortgage companies either

congrats on getting it paid off in the not so distance future!

 

[RearAdmiral]

We closed on the refinance 2/4. Now just waiting to see who the mortgage gets sold to. My principal amount applied more than doubled(roughly 200 to over 400) while my mortgage went up 80/month.

I am paying $20 LESS a month then when I first started in 2013(PMI/30 year and such). As I said before, mortgages and interest can suck my balls. This one isn't quite so bad though.

 

[highland145]

The wonders of compounded interest...just in the banks favor. Too bad kids aren't taught about this in HS

 

[NutBucket]

What other choice does the average person have when it comes to purchasing a home?

 

[edro]

Why do y'all hate mortgage companies?
Good luck saving $200k+ in cash.
Also good luck borrowing $200k+ cash at 4%.

 

[bbhaag]

Congrats on the refi going through. My wife and I did something similar several years ago and we didn't look back/don't regret it.

 

[NutBucket]

Why do y'all hate mortgage companies?
Good luck saving $200k+ in cash.
Also good luck borrowing $200k+ cash at 4%.

Or in our case more like $500-$600k!

 

[RearAdmiral]

What other choice does the average person have when it comes to purchasing a home?

I can see how the average person can get stuck in these mortgages and build next to no equity. It is hard but I guess the average person needs to save more, or target 15 year mortgages instead.

Why do y'all hate mortgage companies?
Good luck saving $200k+ in cash.
Also good luck borrowing $200k+ cash at 4%.

While I don't hate the companies for providing the products, it is just so much money towards interest for a 30 year in particular. It just made me feel sick when I would look at my statements. I am lucky enough to make good money and live in a cheap area as well.

Having gone through the process, I think 15 year mortgages are where people should actually target their "affordability." The amortization goes from sickening to reasonable at least.

What is the average Joe to do though?

The bank doesn't have any problems borrowing my money for 0.02 % / year though.

 

[highland145]

I can see how the average person can get stuck in these mortgages and build next to no equity. It is hard but I guess the average person needs to save more, or target 15 year mortgages instead.
Or rent for 30 years and end up with nothing.


While I don't hate the companies for providing the products, it is just so much money towards interest for a 30 year in particular. It just made me feel sick when I would look at my statements. I am lucky enough to make good money and live in a cheap area as well.

Having gone through the process, I think 15 year mortgages are where people should actually target their "affordability." The amortization goes from sickening to reasonable at least.
My 1st house, did the 30 year loan but made the 15 year payment just in case something happened one month. I was 24 y.o.
What is the average Joe to do though?

The bank doesn't have any problems borrowing my money for 0.02 % / year though.
The bank doesn't want your $$. They are flush with it. TD Bank was even penalizing me for "excessive cash deposits." +$10K/month. I own a mostly cash based business.

And that's another reason your savings account isn't going to earn more interest if the fed hikes their rate.

Just this AM, news report said that 50% of people that would like to buy couldn't come up with the down payment and 20% had bad credit. USDA rural development, FTW.

 

[Chess]

Congrats man... thats a no brainer if ya ask me

 

[Chess]

What other choice does the average person have when it comes to purchasing a home?

rent for the rest of your life I guess ? Shrugs

I bought in 2009 at 4%... I am selling in the next couple years as I have about 30-40k in equity in my town house.

I need a larger house due to storage and space and the ole lady living with me now compared to 2009 when she wasnt ha.

I am only going to do 5% down, I cant justify putting 20% down when it reduces the mortgage by about 60 bucks a month...

 

[RearAdmiral]

And that's another reason your savings account isn't going to earn more interest if the fed hikes their rate.

Just this AM, news report said that 50% of people that would like to buy couldn't come up with the down payment and 20% had bad credit. USDA rural development, FTW.

I also did the 15 year payment with a 30 year loan, but then interest rates went down so this is much better and saves me a lot more.

Owning a home is not cheap, even when owning well within your means. I don't know how folks stretch it out to 3x and beyond their yearly income.

 

[NetWareHead]

I also have to agree with the 15 year mortgage. I refi'd from a 30 year to a 15 year. Cut 8 years off my mortgage and it was great to see my next mortgage statement. A much bigger percentage of my monthly payment was applied directly against the principal and less towards the interest. Im making discernable dents in my principal each month with the 15 vs the 30 year mortgage

 

[RearAdmiral]

I also have to agree with the 15 year mortgage. I refi'd from a 30 year to a 15 year. Cut 8 years off my mortgage and it was great to see my next mortgage statement. A much bigger percentage of my monthly payment was applied directly against the principal and less towards the interest. Im making discernable dents in my principal each month with the 15 vs the 30 year mortgage

It's a huge difference!

 

[highland145]

I also did the 15 year payment with a 30 year loan, but then interest rates went down so this is much better and saves me a lot more.

Owning a home is not cheap, even when owning well within your means. I don't know how folks stretch it out to 3x and beyond their yearly income.

Agree on the savings but, at the time, I was a 1st time home buyer and wanted to make sure I covered my ass.

And 3x is amazingly stupid but they don't teach real life finances in HS. I was at 25% of net income for my payment back then.


I'll be happy to lend you guys $$ at my family rate, over 30 years. It's significantly cheaper that Blue Sky payday loans.:awe:

 

[RearAdmiral]

Agree on the savings but, at the time, I was a 1st time home buyer and wanted to make sure I covered my ass.

And 3x is amazingly stupid but they don't teach real life finances in HS. I was at 25% of net income for my payment back then.


I'll be happy to lend you guys $$ at my family rate, over 30 years. It's significantly cheaper that Blue Sky payday loans.:awe:

I was a 1st timer as well. Also at about 25% for mortgage/insurance/taxes. Being at 25% makes me mad enough heh.

I remember seeing those western sky or something commercials for >100% APR. Wow.

I'm super happy my parents beat financial sense into me, and that my wife is Dutch.

 

[highland145]

I remember seeing those western sky or something commercials for >100% APR. Wow.

I'm super happy my parents beat financial sense into me, and that my wife is Dutch.

"The APR for a typical loan of $10,000 is 89.68%, with 84 monthly payments of $743.99." Do the math, and you realize that borrowers who take the $10,000 wind up paying back $62,495.16 over the life of the loan.

355%APR and people bitch about my lowly rates...

Same. My Dad was old school. No $$ in the pocket, better put your hands in them and walk away. He only financed his 1st car in '57 and the house in '61.

 

[RearAdmiral]

355%APR and people bitch about my lowly rates...

Same. My Dad was old school. No $$ in the pocket, better put your hands in them and walk away. He only financed his 1st car in '57 and the house in '61.

Wow nice. Would be great to only finance a house one time.

 

[highland145]

Wow nice. Would be great to only finance a house one time.

He was pretty tight with $$ and earned a decent salary as a mechanic for Kimberly Clark. He didn't put in AC until I was out of college, after '86, or cable until the 90's. No vacations either. The upside is that my Mom gets $3k/mo in retirement/ssck. If he knew that she was dropping $800-$1K/mo at walmart (she lives alone), he'd be turning over in his grave....Go, Mom.


edit: Until my sis shamed him into buying Mom a new car in 2010, their newest was a 1986 Lincoln. He wrote Ford a $30K check for a Taurus.

edit2: Sorry for the derail.

 

[Greenman]

Are home loans rule of 78 or simple interest?

 

[highland145]

Are home loans rule of 78 or simple interest?

I think rule of 78's is not legal on home loans. Off to google.

https://en.wikipedia.org/wiki/Rule_of_78s

In the United States, the use of the Rule of 78s is prohibited in connection with mortgage refinancings and other consumer loans having a term exceeding 61 months.[2]

I love me some rule of 78's though. Average contract is 8 months. :sneaky:
https://en.wikipedia.org/wiki/Rule_of_78s#cite_note-2