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HLS
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 hitsParticipantPerhaps many of the people with a ‘gold mine’ of equity are already retired. Why bother moving ?
Selling only gets ya $500,000 tax free for a couple if they qualify…
sell,, pay taxes..move.. May as well stay put.Some people are leaving, you just don’t hear about them as the secret is where they are going to
ParticipantSimple question WHY??
Even if all your assumptions are correct,
You have unknown risks in a 3rd world country.
What are you trying to accomplish ?You think the legal system will treat you fairly if you ever have a dispute ?
Do you know what the title rights are in Mexico
and how good title insurance is there ?
Are you a Mexican citizen ?PS: the Canadian dollar is ‘relatively’ weak.
I don’t know what the laws are for foreign ownership there but I’d NEVER consider buying property in Mexico.You are also dealing with potential income tax concerns/double taxation no matter which border you cross.
Participant[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.
ParticipantI know that AN is definitely on top of the game and pretty sure that FLU is too.
We’re not talking abut HELOC’S & 2nds,,,
We’re talking about refi of 1st mortgages at a rate that comes with absolutely NO COST to the borrower and in many cases includes additional CASH credit to the borrower.Who knew 10 years ago that there would be the opportunity to refi 5 to 10 times if somebody wanted to, each time at no cost AND many times pocketing extra cash.
I usually recommend saving at least .25% on at least $200K but it still makes sense for less. The larger the spread, the lower the loan amount can be.The cash would have been a losing decision after 5-7 years but because they refi’d within a shorter window, they kept the upfront cash and did it again, and again, and again.
I’m pretty sure FLU cashed out well, before he rang the register.AN posted recently about having enough credit to pay most/all of his property taxes for several years.
**This opportunity will probably never happen again in our lifetimes**
These guys rode the wave…Had they been surfing in Hawaii it would have been an amazing ride.As far as ‘gambling’ with an ARM, I would never recommend that for anyone planning to hold property long term regardless of the index and/or margin.
It worked for BG, but in the grand scheme she got lucky. AN & FLU benefited each and every time with Fixed rates, all the way down, never risking exposure to a huge swing to the upside.
For most borrowers I always recommend fixed. 10-15-20-30 whatever. The shorter the term, the lower the rate.
I guarantee you that anybody who got a 30yr fixed loan- 15 years ago doesn’t have a 3.00% rate. Refinancing today for 15yrs keeps them on the same track at a much lower payment.
If they keep making the same payment they can possibly shave 5 years and be done in 10 years.
(depending on their current balance, it may be difficult to get no cost)I do not suggest gambling with the biggest financial decision of their lives. AN & FLU never gambled.
If anybody is so sure which way rates are headed,up or down, learn how to trade on Wall Street. You can make so much money that you can pay cash for a house, why bother with a mortgage.
Symbol TBT (-2x 20YR Treasury) has been a wonderful short the last 5 years, having gone from $134 down to $36. Many people think it can’t go much lower, I have no opinion.The reality is that most people have no business having money in the stock market controlled and manipulated by various forces and forced to ONLY have long positions.
Most people have no idea how or why to short a stock
or what puts & calls & LEAPS are yet they have substantial amounts of money ‘invested’ in something they really know very little about, and just hope and pray that it goes up. (To me, HOPE is not a strategy)Managed by 401K plan admin who make money every second of every day managing funds whether the investor ever makes a penny or not.
If investors cant identify stocks that are overpriced and should be shorted they probably shouldn’t be comfortable trying to identify stocks that are cheap.
ALL credit card plans allow transfer of free flights, cruises & hotel nights to friends or family members.
IMO there’s no reason why anyone with good credit shouldn’t be taking advantage of these teaser offers.ParticipantI 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.ParticipantI know that you’re intelligent along with many others, but cannot understand why you (and others) don’t see what FLU an AN have done… WAS BRILLIANT.
They have pocketed money tax free every time they refi’d to a lower rate. They had the OPTION of starting over OR the OPTION of staying on track for the same payoff.
FLU was genius in refinancing and pocketing money and then paying off his loan. It’s not illegal and it’s not immoral.
Had he known that’s what he was going to do, he would have been better off taking a rate that 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.As far as making payments to far off lenders, most borrowers do not make payments to lenders, payments are made to SERVICERS and every loan doc package these days includes a disclosure that states Loan servicing can be transferred at any time to any place; Borrower cannot object.
The guaranteed compounding of interest rate savings on a mortgage is a huge secret that most people don’t get INCLUDING LOAN & FINANCIAL PROFESSIONALS.
It’s akin to doubling a penny every day for a month and not realizing what the end result is. It’s HUGE.The numbers don’t lie. I’ve explained mortgage refinancing analysis to CPA’s, CEO’s CFO’s and other financial ‘experts’ who never really understood what the real benefits were until I showed them.
Plenty of people run around with grocery store coupons to save 25c but wont take the time to understand that they could save $10,000- $100,000 (or more) at NO COST
ParticipantBG,
I’m just going to touch on a couple of points that cause most people to be confused.The ONLY concerns about a loan should be the interest rate and the cost to get it.
(I don’t want to debate the difference between cost and no cost rates)
With a NO COST rate, who cares what the garbage fees are, they’re all covered.The confusion arises when one ONLY looks at their new payment. Starting over at 15 or 30 years IS A CHOICE, not an obligation.
Any RESPONSIBLE adult can adjust their monthly payments to pay their loan off in 2, 6.5, 12, 15.7, 18, 23, 25, 27.2 or 30 years AS THEY CHOOSE. There are no prepay penalties any more.The problem is that most loan advisers don’t understand this themselves so they cant explain it properly.
The ULTIMATE benefit to refinancing (at a fixed rate) is to continue making the same payment one is currently making but at a lower interest rate.
NOBODY has to start over at 15 or 30 years with the lowest payment; that’s just another OPTION to benefit from a refi but not the ultimate.Without a doubt, there is hundreds of billions of dollars being wasted by people who are paying too much in interest on their mortgages.
Saving just .25% can amount to tens of thousands of dollars in savings.
Saving 1.00% can amount to $200,000 savings.
Of course it depends on loan amount and if people can qualify to refi.Objections like hits to credit score, employment inquires and payments to out of area ‘lenders’ are quite frankly, ridiculous. Credit scores are meaningless & useless unless you need a mortgage or a car loan….
to be continued,,,ParticipantFLU
If you can recognize and admit to enjoying life more,
isn’t that a good thing ??I can share plenty of discussions I’ve had with
senior homeowners about reverse mortgages
(I don’t like them; only a last resort)
Most were similar..
a) They were in a rush to have no ‘debt’ so they paid off their house. They have no debt, but very little cash to live off & enjoy life. Only option today is a reverse mtg.
They can no longer qualify to refi for a conventional cash out loan.b) Others had lots of equity but no cash. They didn’t sleep well because they had no money and worried about paying bills and enjoying life.
Ive never met anyone who had money in the bank/cash cushion that didn’t sleep well even though they had a mortgage.
Many seniors are just getting by. It’s hard to imagine when you only know ‘wealthy’ people. Not everyone collects SS or gets much.
The heirs of people with no mortgage will be the winners, and many of them deprived themselves of enjoying life.Of course there is a price to pay to have some debt, but you cannot understand the feelings that some people have about their situation.
There’s a price to pay to have no debt as well; not always financial.Participant[quote=harvey][quote=flu]Careful HLS…. People are probably going to be accusing you of paying me to say nice things about you… Or they might think you’re trying to fish for business here.[/quote]
Of course he’s not fishing for business by showing up on every thread involving someone shopping for a mortgage.
Why would anyone think he was fishing for business?[/quote]
Harvey, there’s a concept that you are apparently completely oblivious to; which is posting about subjects that you actually know something about and are relevant and helpful.
Your snarky comments have sent business my way and I’m not the only one who recognizes that you are pathetic.
(or is it jealous )Participant[quote=flu]One bad thing about paying of a primary…. I am finding I am having less financial discipline these days.
I use to do a much better job budgeting things. Now, there’s less motivation to cut things so close. Or spend the time to figure out the most optimal way to save on X. I don’t know if that is a good or bad thing. I just call it how it is.[/quote]
Are you enjoying your life more OR less now ??
(more relaxed/less stress?)The transaction of paying off your primary did not make you less disciplined;
Your feelings about your situation have made you less disciplined.**Your feelings about this could change at any time; and that’s OK.
ParticipantI think spouses get stepped up basis also..
Have heard several stories from the Bay area..
Spouses don’t usually die together before kids get it.Houses bought 50 years ago for $50,000, worth $2M today,
Husbands were sick. Told wives to sell the house after he died… limited (or no?) income tax owed because of stepped up basis ???ParticipantThere are tax aspects to consider and there’s some expert advice available here but that’s not my expertise.
30+ years ago I had a wealthy client who explained to me that he was a member of a group of wealthy guys, who really were wealthy. They had high net worth and lived well, but many had no ‘cash’
It was tied up in investments & tax shelters(in the 80’s)It didn’t make sense at the time but over the years I’ve fine tuned strategies for myself and clients that have worked well.
There’s a time in life to take risks and there’s a time in life that you want to be more conservative.
Sometimes a person in one stage is trying to give the other stage advice and it’s inappropriate.I’ve learned that having cash is not important as long as you have ACCESS to cash if you need it.
IMO there’s nothing wrong with manageable debt and dependable income streams to support.
I’d rather have cash flow and income throughout life to enjoy, rather than knowing I could have huge income
10 or 20 years from now.To just stubbornly say that ‘I want no debt at retirement’ and not explore alternatives, is foolish.
If I could borrow money at 3.5% and earn 5%+ on it,
I’d be happy to be in ‘debt’ for the rest of my life.If I had a 401K AND a mortgage AND a secure job,
I would max out a 401K loan and pay down/off my mortgage.I think the entire 401K system is a ticking time bomb and a huge threat to the world economy, far bigger than the
housing bubble of yesteryear.ParticipantRefinancing a primary is less expensive than a rental.
Either way you end up with the same amount of debt.
It’s the cheapest mortgage money you can get.Historically, a very small % of people with moderate net worth++ end up in trouble/foreclosure.
Seek a tax professional for tax aspects.
Many people forget about the standard deduction when figuring Itemizing Deductions… The larger your household, the less sense it makes to itemize.Being a landlord isn’t for everyone, but if you believe that property values will increase, I would think that owning 2 properties with some debt is better than owning one free and clear.
Having hundreds of thousands of dollars (or millions) of equity but not being able to enjoy your life is pointless to me.
Your heirs will appreciate it !It’s a different perspective than some who want to pay everything off and have no debt later in life..
I’ve known people who died young with lots of equity and others whose health declined that their golden years weren’t so golden,,, But they had no debt, little cash and lots of equity. -
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