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Coronita.
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May 22, 2016 at 10:42 PM #797887May 22, 2016 at 10:44 PM #797885CoronitaParticipant
[quote=HLS] was .375-.50% above market on his last ref and pocket a pile of cash.
The credit is cash and it’s up front. The lender hopes to make it back over time but I guarantee you they didnt. FLU & AN are MUCH further ahead than 99.5% of others who don’t get it and don’t want to take the time to get it.
Your attempt to discredit what FLU did is completely off.
[/quote]Totally off topic, and my rambling… But there’s some food for thought. I love 1%CD’s. I don’t have a single one.
You can beat that 1%CD pretty easily by just making some mistakes in life…
For example, my favorite is when you screw up on your taxes and need to file a 1040X 2 years later to get your money back. The IRS sends you a nice refund + interest that beats that 1% CD. Heck, your impound account for a mortgage pays better than that 1%CD in CA, because impound accounts are 2% minimum in CA….Too bad it’s limited. That was why previously I asked “what happens if you over-deposit in an impound account..”And if I was younger, I would definitely play the “credit card roulette” with the 0% balance transfer offers that one of my colleagues played as a means to pay for his daughter’s college so he could stay invested as long as he could, lol. The guy was a genius.
For me, this is just one big game/joke. Banks/institutions come up with some of the most elaborate schemes to screw the majority of the population, I’d say maybe 99% of the population….. with 1% of the population, they actually lose money off of. I strive to try to be that 1% that corporations, companies, etc lose money off of.
My inadvertent game these days? Buy gold bullion on Ebay and selling them near break even or slightly above, just to rack up frequent flyer miles..
May 22, 2016 at 10:45 PM #797886bearishgurl
Participant[quote=HLS][quote=bearishgurl]
I just wonder why someone would repeatedly refi just to shave .125% or .25% off their current interest rate (especially if they didn’t need to take any cash out) and then shortly thereafter retire the loan! I mean, what’s the point? How much did they really save on their mortgage over their entire period of ownership . . . especially if their mortgage was continually or even on some occasions reset back to 30 or 15 years upon successful refi?[/quote]
It’s actually a BRILLIANT strategy to refi about 6 months before paying off a loan with a high balance….
6 months is a reasonable amount of time to say my life changed, I’ve decided to pay off my loan. (Nobody is going to ask)Credits are always a % of the loan amount, there are more dollars available (and easier to get no cost) with a higher balance.
On a $200K loan, you could get anywhere from $1000 to $4000 and a 400K loan double that.
Pay $40 a month more for 6 months, get a few thousand dollars! That’s the point…. Very few people do it OR even understand they can do it.
Does that make it a loophole?.I’m not clear on why you keep bringing up reset of a mortgage when you stated that you know payments
can be adjusted. Reset is only one option of a refi.
Those who understand adjust their payments accordingly.the MINUMIUM payment ALWAYS resets a loan. Adjusting payments will change the term.[/quote]So, HLS, you’re essentially saying here that it’s worth it to go thru the laborious motions of refi when you have plans to retire the mortgage in the near future, just to receive the cash back at closing. In order to get the max cash back at closing, you refi at a slightly higher interest rate cuz that will yield the borrower a higher cash back amount at closing. The borrower doesn’t care if they are making a slightly higher payment than they would have had they taken out a zero point mortgage cuz they plan to only make a few payments before paying it off.
Um, HLS, how long have these deals been going on? If it’s been longer than a few months, why haven’t lenders become wise to this practice? Whatever happened to the prepayment penalties (typically 3 yrs) that all fixed mortgage products used to have in their docs? Why would lenders let this practice continue to go on without protecting themselves? And how can they survive repeatedly originating these kinds of mortgages and still pay a respectable YSP to the procuring broker? What am I missing here, HLS??
This practice is sort of akin to a new vehicle buyer with good credit planning on paying all cash for a new vehicle when they walked into the dealership but ended up applying for a “0% interest auto loan” offered by the vehicle’s mfr because the dealer offered them an even better deal on the vehicle if they do so. So they take out the 0% loan and make 1-6 monthly payments (just long enough for the dealer to receive their kickback for bringing in the loan from the vehicle mfr) and then pay the vehicle off.
Those that don’t need credit at all are the ones who are being showered with credit offers left and right (they go right into my shredder) …. and usually under the best terms …. terms beyond unimaginable in past decades …. That’s the way it’s always been :=0
Joe and Jane 6p working stiffs with a 640 FICO score (they’re youngish and still trying to build their credit) can’t borrow enough mortgage to buy a home in a coastal CA county or even get a credit card on decent terms. A lot of folks in this group are undoubtedly still using secured credit cards and branded debit cards for everyday purchases.
When do you think the “reward the borrower” party will end, HLS? Or will it??
May 22, 2016 at 10:49 PM #797888an
Participant[quote=bearishgurl]Um, HLS, how long have these deals been going on?[/quote]
It has been going for for many years. As I’ve stated in the past, I didn’t pay a dime in property tax or insurance for 2-3 years a few years back (around 2011) or so. I’m about to close on another one now, and hoping to start the paper work process on another one in a few months.1st, I make sure that there’s no prepayment penalty and 2nd, I make sure I ask the mortgage broker how long I have to keep the loan so they don’t have to pay back to credit to the bank/lender. I don’t want to burn them by refinancing too early. I could and the broker can do anything about it, but I don’t want to be a dick.
May 22, 2016 at 10:59 PM #797889CoronitaParticipant[quote=AN][quote=HLS]I can rant on as long as anyone BUT can also provide info that can make/save people money AT NO COST. Guaranteed. PERIOD.
It’s not economic theory OR projections OR NPV gibberish. It’s reality.As far as credit cards go, I get $500-$750 every time I open a credit card account, with an 800+ credit score
I’ve probably had over 100 credit cards and have been on lots of flights, cruises and hotel nights FOR FREE.
Use of credit cards responsibly is a goldmine for responsible adults. (and can RAISE a credit score)I’d be embarrassed to say that I only had 4 credit cards.
I think I have 18 right now and just got a Delta Amex card last week, that comes with enough bonus miles for a FREE round trip nonstop LA-Belize or other Caribbean locations. (There’s $57 tax to be paid to Belize)
and get to check 1st bag free.I’ve paid mortgages off with 1-2% loans from credit card companies. I deal with facts, not theories.
Certainties, not projections.Just because 99.5% of people don’t ‘get’ certain things, it doesn’t mean they’re wrong.
There are plenty of loopholes and ways to benefit when people are willing to listen instead of argue about things that they really don’t understand.[/quote]Shhh… don’t tell all the secret :-D. I just had a 4 round trip plain tickets to Hawaii and car rental for 8 days free of charge, thanks to credit card. I would never travel any other way. I’m planning a mini stay-cation this October and am looking into the 2 free nights Hyatt credit card, so I can stay at the Park Hyatt for free for 2 nights.[/quote]You know AN, I have to thank you about bring up the frequent flyer miles thing you did over lunch.. That was a pretty interesting tip. I’m in the process of mind melding your FF tip with how eBay Bux program works when it comes to precious metal purchases…Since I was planning on stacking up on gold anyway, I might as well try to rack up frequent flyer miles in the process…Too bad eBay limits the rebate to $500/per quarter.
May 22, 2016 at 11:03 PM #797891Participant[quote=AN][quote=bearishgurl]Um, HLS, how long have these deals been going on?[/quote]
It has been going for for many years. As I’ve stated in the past, I didn’t pay a dime in property tax or insurance for 2-3 years a few years back (around 2011) or so. I’m about to close on another one now, and hoping to start the paper work process on another one in a few months.1st, I make sure that there’s no prepayment penalty and 2nd, I make sure I ask the mortgage broker how long I have to keep the loan so they don’t have to pay back to credit to the bank/lender. I don’t want to burn them by refinancing too early. I could and the broker can do anything about it, but I don’t want to be a dick.[/quote]Yeah, I was with someone at the dealer who bought a new vehicle from a great and helpful salesman and they said the same thing.
I just asked cuz I was wondering why these lenders don’t insist on prepayment penalties. Up until the “fog-a-mirror, get-a-loan era” (approx 2004) 3-year prepayment penalties were standard fare on fixed rate conventional loan program docs.
It’s a LOT OF WORK for several people to originate just ONE mortgage loan so I don’t understand how lenders can afford to let the opportunistic AN’s of the world “run amok” by repeatedly “working the `system'” as they have been ;=]
May 22, 2016 at 11:29 PM #797892CoronitaParticipant.
May 22, 2016 at 11:39 PM #797893HLS
Participant[quote=bearishgurl]n(a true “option ARM” which doesn’t exist today under the former terms), they would have an interest rate today in the 3% range. They would be paying ~3.6% with a 2.5% margin and ~3.85% with a 2.75% margin. In previous years, the COFI index has been as low as .931% (in Sept 14). Those (now few) borrowers still left on the COFI train have been able to take advantage of current low rates without lifting a finger!
after paying 4 years of $150 annual fees and having already paid $600 in annual fees (which almost covered those two “free” RT plane tix I rec’d),
I get 6% cash back in all standalone grocery stores and 3% cash back at all standalone gas stations. Now THAT is my kind of card!
You posted that the opportunity for “no-cost” (to the borrower) mortgage loans may never happen again, HLS. When did they start to “come into vogue” and when do you think they will become unavailable?[/quote]
Options ARMS were promoted by the lowest of the low.
Downey Savings, Country Wide & World Savings were 3 of the most aggressive. AN absolutely disgusting product that paid huge commissions and were ‘weapons of financial mass destruction’
The reps made a small fortune and truly had NO IDEA what they were selling and what the risks were.
I studied them and decided that I would NEVER offer one and I never did.There was an index + a margin. What most people don’t know is that there were multiple options for the margin.
The higher the margin, the larger the commission.
Many mortgage lowlifes put their friends, relatives, neighbors & clients into OA’s with high margins because of huge commissions & low payments that very few people understood.As you put it, ‘Lifting a Finger’ could save people tens of thousands of dollars… and have ZERO risk of future rate increases.
NOT LIFTING A FINGER has cost money and there is future risk of rate increase.
Not something I would do OR recommend.BG, you took a chance that most people shouldn’t take.
In hindsight, assuming that you could qualify, you would have been MUCH better off doing what AN & FLU did, pocketing money all the way down, and today refinancing into a 10 or 15 year rate, FIXED and lower than you are quoting, still variable.
You’d still be on the track you’re on,, with no rate risk. I understand that you can pay it off if you wanted to…I agree with FLU that it makes little sense to be collecting 1% and paying over 3%.5YR & 7YR ARMS exist today, with a 5% cap; not recommended for someone with a long term horizon.
the lender credits are not as big on ARMS, but the rates are a bit lowerYou should have cancelled your AMEX card after the 1st year, the points were already in your Rewards acct if you hadn’t used them. There was no reason to pay 4 years of annual fees.
I believe Preferred Blue has an annual limit at Grocery stores.($6000 spend = $360 rebate limit & $75 annual fee?) Most gas stations charge a premium to use a credit card, what are you really saving ??the Costco option with AMEX ends June 19th.
THAT is NOT my kind of card.I can save 3%-5% at ARCO AM/PM with credit card… I’d rather get $500 credit my way, I’m glad yours works for you.
I rarely book a hotel room directly, the flexible options at Hotwire & Priceline usually get 4 star rooms (Sheraton, Marriott, Hilton, Hyatt, Suites etc) for the price of Motel 6 or Best Western
Lastly, my comment about will never happen again was referring to the opportunity to refi 5-10 times in a declining interest rate environment as FLU & AN did.
Credits from lender to cover all closing costs have been available for over 10 years but spreads were different.
I don’t see these going away any time soon.Most people who chose to pay anything for a primary residence loan in the last 5 years probably made a mistake, although some may not of had an option for various reasons.
It’s more difficult to get a rental property loan at no cost because of pricing hitsMay 23, 2016 at 12:11 AM #797897ParticipantThe party isn’t going to end anytime soon.
Riding the wave that AN & FLU did may or may not end.AN can adjust his payment and pay his loan off in 15 years if he wanted to, his payment would still be less than when he originally bought
Lenders do not keep 30 year loans. They are originated and sold to FNMA/FREDDIE who bundle them into GNMA’s that are sold worldwide.
Most people DO NOT do what I do & what AN & FLU did. (Most of my clients do)
If a GNMA loan portfolio is $100M and a few loans get paid off early, so what.
The crazy new account bonuses that credit card companies make are insanely profitable overall or they wouldn’t do it.
They want you to pay annual fees, over the limit fees and late charges. many people do, but you don’t have to.
Read the fine print. Understand the rules. 1st year usually free.
Using credit cards responsibly is the next best thing to free money.The mortgage option & credit card game has been going on for years. Enough money is made off of the masses to pay for the few that ‘maximize’
I’ve been doing it for many years.
It’s all just a fun game that anybody can play.The lower a loan balance gets, the higher the rate needs to be to cover for a no cost loan.
As my schedule permits, I’m happy to explain an exact FREE analysis for anyone who wants to contact me with specifics for their situation. no cost, no obligation.
I just explained a $110,000 no cost savings to a Pigg.
Easy explanation.(I don’t want to argue with anal engineers about .125% less and how no cost isn’t really no cost because if you paid something you’d get more)
It’s mind boggling how many people have 4%-5% or higher loans who can qualify to refi and just dont get it.
For those who cannot qualify, it’s just sad.Conventional loans have not had prepay penalties in a long time.
Prepays were on sub-prime loans and were made illegal about 6-7 (?) years agoAs FLU says, “Your Miles May Vary”
May 23, 2016 at 12:41 AM #797898Participant[quote=HLS][quote=bearishgurl]n(a true “option ARM” which doesn’t exist today under the former terms), they would have an interest rate today in the 3% range. They would be paying ~3.6% with a 2.5% margin and ~3.85% with a 2.75% margin. In previous years, the COFI index has been as low as .931% (in Sept 14). Those (now few) borrowers still left on the COFI train have been able to take advantage of current low rates without lifting a finger!
after paying 4 years of $150 annual fees and having already paid $600 in annual fees (which almost covered those two “free” RT plane tix I rec’d),
I get 6% cash back in all standalone grocery stores and 3% cash back at all standalone gas stations. Now THAT is my kind of card!
You posted that the opportunity for “no-cost” (to the borrower) mortgage loans may never happen again, HLS. When did they start to “come into vogue” and when do you think they will become unavailable?[/quote]
Options ARMS were promoted by the lowest of the low.
Downey Savings, Country Wide & World Savings were 3 of the most aggressive. AN absolutely disgusting product that paid huge commissions and were ‘weapons of financial mass destruction’
The reps made a small fortune and truly had NO IDEA what they were selling and what the risks were.
I studied them and decided that I would NEVER offer one and I never did.There was an index + a margin. What most people don’t know is that there were multiple options for the margin.
The higher the margin, the larger the commission.
Many mortgage lowlifes put their friends, relatives, neighbors & clients into OA’s with high margins because of huge commissions & low payments that very few people understood.As you put it, ‘Lifting a Finger’ could save people tens of thousands of dollars… and have ZERO risk of future rate increases.
NOT LIFTING A FINGER has cost money and there is future risk of rate increase.
Not something I would do OR recommend.BG, you took a chance that most people shouldn’t take.
In hindsight, assuming that you could qualify, you would have been MUCH better off doing what AN & FLU did, pocketing money all the way down, and today refinancing into a 10 or 15 year rate, FIXED and lower than you are quoting, still variable.
You’d still be on the track you’re on,, with no rate risk. I understand that you can pay it off if you wanted to…I agree with FLU that it makes little sense to be collecting 1% and paying over 3%.5YR & 7YR ARMS exist today, with a 5% cap; not recommended for someone with a long term horizon.
the lender credits are not as big on ARMS, but the rates are a bit lowerYou should have cancelled your AMEX card after the 1st year, the points were already in your Rewards acct if you hadn’t used them. There was no reason to pay 4 years of annual fees.
I believe Preferred Blue has an annual limit at Grocery stores.($6000 spend = $360 rebate limit & $75 annual fee?) Most gas stations charge a premium to use a credit card, what are you really saving ??the Costco option with AMEX ends June 19th.
THAT is NOT my kind of card.I can save 3%-5% at ARCO AM/PM with credit card… I’d rather get $500 credit my way, I’m glad yours works for you.
I rarely book a hotel room directly, the flexible options at Hotwire & Priceline usually get 4 star rooms (Sheraton, Marriott, Hilton, Hyatt, Suites etc) for the price of Motel 6 or Best Western
Lastly, my comment about will never happen again was referring to the opportunity to refi 5-10 times in a declining interest rate environment as FLU & AN did.
Credits from lender to cover all closing costs have been available for over 10 years but spreads were different.
I don’t see these going away any time soon.Most people who chose to pay anything for a primary residence loan in the last 5 years probably made a mistake, although some may not of had an option for various reasons.
It’s more difficult to get a rental property loan at no cost because of pricing hits[/quote]HLS, my option ARMs had lower margins (1.75 to 2.5%) which do not exist anymore. None had prepayment penalties (as fixed programs did at the time). The program I am in required a minimum 740 FICO score (mine was 804 at the time) and was only available to prime and Alt-A borrowers. Prior to the MBS’s taking complete control of the mortgage market, there were far more choices in loan products to choose from with great terms. The older Option ARMS for prime borrowers were NEVER an exploding loan with exotic terms and up to 12 points to the lenders/loan brokers (like the toxic products you are mentioning here which were peddled during the “go-go years” by “crooked” mortgage brokers). They were pure Option ARMs which adjusts monthly and during its first five years, it offered 4 and then 3 (by the 5th year, I think) “payment options.” Of course, I ALWAYS SELECTED the fully amortizing payment. If the borrower is not a stupid gambler who ends up with neg am before the first year runs out, Option ARMs are fine. These programs cannot all be painted with the same broad brush. There were GREAT Option ARM programs out there backed by COFI, 1yr T-Bill and LIBOR (I like COFI the best) and nearly all of them had 0 point programs. They typically only cost $2200 to $2800 to close back then for a conforming loan. However ancillary services (escrow, title, etc) have increased in price a lot since then.Of course, you understand that all those HUGE interest rate resets at the beginning of the 3rd, 6th, 9th or 11th year (even on ARMS offered between 2004 and 2007) were primarily due to STUPID BORROWERS who elected to pay I/O every month (Opt 2) or LESS THAN I/O (Opt 1) and then cry wolf when they had to face the music. That’s insanely stupid and they got no sympathy from me (unless they were English-challenged and got “roped” into taking the loan so the mortgage broker could defraud them out of big chunks of equity at loan closing). Yes, this DID happen numerous times in my neck of the woods.
Just like health insurance, I feel the US mortgage market has far more limited choices to choose from today than it did in prior years/decades …. all due to too much gubment intervention.
I have on occasion used AMEX Travel and Expedia to book a room but I would really prefer the flexibility to change my plans on the day of check-in (due to deciding to stay longer in the previous town/city) without penalty and you can’t do that with those online travel aggregators. You have to pay up front to get the deep discount and then forfeit the amount paid if your plans change.
I know I kept the Gold card too long. I was on “autopilot” until a few weeks before I was to be billed for another year’s annual fees. I guess that’s how they can offer the 2 “free” RT tix to new signups. The members on “autopilot” just pay their annual fee every year whether the card really meets their needs … or doesn’t.
I didn’t know ARCO accepted CC’s, HLS. And I’m only a one-person household (except holidays) so I’ll never hit the $6K AMEX grocery award limit … ever :=0
Oh, and btw, most Best Westerns these days are 4-star hotels. While road tripping, I like to park right outside my room door (motor-lodge setup). I don’t park underground and take elevators to my room unless I’m at a ski-in/ski-out resort and leave my skis in a locker on the ground floor. That’s where the Sheraton, et al, comes in :=]
May 23, 2016 at 1:16 AM #797899CoronitaParticipantThe great thing about a 30 year ARM is that while one might get lucky during the first half of the 30 year watching the ARM come down during a period of declining interest rates, there’s an entire 14-15 years of political and economic uncertainty that one gets to see if rates move in the opposite direction.
If my memory serves me correct, many ARMs that were based on 11th district have a minimum floor that rates can’t go below and also no maximum cap, that will limit how much rates can be charged.
Personally, I would never gamble with an ARM with a floor on one end and no cap on the other, because to me, that would be a lot of risk. But that’s just me. Others could get it to work if that’s the loan product that’s best for them.
There are Helocs that have 3% rates with a 2% floor and 6%cap… I know, because I have one, though currently I’m not using it.
May 23, 2016 at 5:01 AM #797900flyer
ParticipantIt’s interesting to read how we all have different ways of approaching the real estate game. I think many Piggs are probably glad, as we are , to have gotten in at opportune times which enabled us to build something that, hopefully, will benefit many future generations of our families.
Although none of us can take anything with us, it’s a good feeling to know you can pass things along to others to enjoy.
May 23, 2016 at 5:20 AM #797901scaredyclassic
ParticipantI don’t think I can help future generations.
But I do think one of the biggest benefits u can give your kids is,to at least not be a burden and give them the appearance of a secure fallback option.
May 23, 2016 at 6:50 AM #797902no_such_reality
ParticipantLong thread, skipped most of it.
This is simple, if you’re currently around $400k on balance and at 4%, you can get a better rate, lower payment AND let the lenders pay for it. Aka free. Sure, you could do better, but you have to pay for that.
Don’t let great be the enemy of good.
May 23, 2016 at 7:12 AM #797903CoronitaParticipant[quote=no_such_reality]Long thread, skipped most of it.
This is simple, if you’re currently around $400k on balance and at 4%, you can get a better rate, lower payment AND let the lenders pay for it. Aka free. Sure, you could do better, but you have to pay for that.
Don’t let great be the enemy of good.[/quote]
Thank you! Exactlly….
Sheesh….. And the irony is this thread isn’t even about what is the best loan.
It’s was about “hey, do you guys have a lender/broker you can recommend for me, I’m interested in a 0/0 loan”…..
However, I’m glad we were able to successfully butcher this thread, as we butcher every other finance/investment/related thread these days. 🙂
What is wrong with some of you people? If this was older times, some of you would probably insist the world is still flat.
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