[teaboy]

[quote=moneymaker]Your MIP could be changing from a 5 year to a life of the loan.[/quote]
Regarding MIP, my mortgage is <80% LTV, so this is not relevant.

[quote=moneymaker]I think serial refi'ing is probably about as profitable as serial gambling, the house will always win, unless you walk away. Is that you're strategy?[/quote]
Yes, of course I can walk away. I would continue refinancing and pulling out ~$16k/year while it made sense, then if/when rates are high enough to justify it, I'd use the saved cash to pay down or pay off the mortgage.

Again, it is most likely that I will not remain in my current house for 15+ years, and so cannot reasonably expect to be able to take full advantage of a 15 or 30-year mortgage.

[teaboy]

[quote=arv]My latest is around 6800 cash back on the closing which happened today.
[/quote]

Arv,
6800 “cash back” sounds high. Is this net of all lender fees (“origination” fees, etc), and other fixed closing costs (appraisal, title, other fees, etc)? If so, how did you achieve this?
My understanding is you cannot receive actual cash back from the closing (as that would make it a “cash out” refinance), so the net credit you receive has to be less than the other items the borrower must fund at closing (i.e. the initial deposit for you escrow account, and the daily interest charge for the period between closing date and the first month’s new mortgage payment)
As such, it’s my understanding that, for me, the greatest net credit I can get from each refinance is ~$4k.

[quote=EconProf]Teaboy, looks like you (and others) have made good money by refinancing and “capturing” the gain resulting from the falling interest rate environment.[/quote]
EconProf,
In a falling interest rate environment, as in my previous 3 refinances, I have received both a net credit plus a lower interest rate. This is a win-win.
In a rising interest rate environment, one would receive a net credit plus a higher interest rate. This is a win-lose.
However, what I am proposing is that even in a (not too steep) rising interest rate environment, the former “win” (net credit) would outweigh the latter “lose” (higher interest rate).
No-one can predict rates. From a practical point of view, also, I realize that it is most likely that I will not remain in my current house for 15-years, and so cannot reasonably expect to be able to take full advantage of a 15 or 30-year mortgage.

No-one can predict rates, but if we assume that they follow a sine wave over time, assume inflation at ~3%, etc, would be the equation to model the expected profit/loss from my hypothesis?
Is there a math wiz in the house?

tb

[teaboy]

[quote=SD Realtor]…if you simply count that interest as paying rent then yes, you are not doing badly.[/quote]
SDR, of course I count that as equivalent to rent. I need to live somewhere.. 🙂

[quote=SD Realtor]In order to gain any measure of whether your plan is successful or not we have to know how long you would own the home[/quote]
Maybe. But it’s so difficult to know what might happen. If I had to guess:
~5% chance we’ll be here 30+ years
~15% chance we’ll be here 11-29 years
~40% chance we’ll be here 5-10 years
~40% chance we’ll be here <5 years

so, let's call it ~9 years.

[quote=EconProf]You've been able to do it only in a falling interest rate environment...with rates now leveling off or going up, it will no longer be feasible.[/quote]

EconProf, I'm not sure I follow. Are you saying that I wont be able to refinance and get a ~$6k net lender credit when rates are level or going up? I dont understand why this would be.

[teaboy]

EconProf, what do I care about (non-material changes to) interest rates?
If I refinance 4 times in 1 year and in that time rates go up from 3.5% to 5.5%, I would net $16k from the refinancing (tax free) and would be paying and extra $8k (2% * $400k, tax deductible) per year in interest.

Highly simplified, I know. But, am I missing something?

tb

[teaboy]

[quote=arv]Following similar strategy and I am able to refinance two times with negative points receiving around 3K and reducing rate at the same time. The only way to receive funds was opening an impound account with lender.

Not sure if there is a clause which can limit refinance frequently to leverage current mortgage environment this way.[/quote]

OK guys n gals, so I’m back again trying to get my head around this free lunch I’ve found. Arv, I think you and I are onto a winner here.

In October I refinanced and *effectively* made $3k profit from it. I also refinanced from a 30-year to 15-year fix at a lower rate but the loan duration and interest rate on the loan were not of concern to me, as I am intending to refinance again as soon as I can (every ~3 months ad infinitum).
Here are the rough numbers on the refinance:
$403k (mortgage payoff to original mortgage)
$403k- (new mortgage loan)
$5k- (net lender credit)
$2k (fixed closing costs: appraisal, title, fees, etc)
$4k (prepaid and escrow items: interest for partial first month, property tax escrow) – note: I don’t consider these true “costs”.
$1k- (cash required from me at closing)

So, I refinance, pay $1k upfront, then a few days after my original mortgage is paid off, I receive a check from my original mortgage servicer for ~$3.5k for the escrow I had with them, plus ~$0.5k left over from the mortgage payoff (which they presumably overestimated to ensure they get enough payoff money to cover additional interest if payoff is delayed).
Therefore, my net profits from the refinance are: $3.5k + $0.5k – $1k = $3k.

I just did it again in January, refinancing back from a 15-year to a 30-year and got $4k back this time. Again, the loan duration and interest rate on the loan were not of (material) concern to me, as I am intending to refinance again as soon as I can (every ~3 months ad infinitum).

If I can do this 3 more times this year, I’ll have netted ~$16k. tax free.

Known risks/issues include:
1. I’m continually effectively adding on 3-4 months onto the life of my mortgage every time I refinance – I realize this but my net wealth increases with each refinance. That’s all I care about. I have savings and investments elsewhere.
2. Rates might start increasing materially – in which case I might just have to decide to stop my merry refinancing dance.

Does anyone else have thoughts on this? Who is losing out here? Is it the purchaser of the mortgage asset (Freddie/Fannie), who was expecting a nice 30-year income stream only to have me pay it off after 3 months?
Have I really found a free lunch or am I missing something and actually on a riding for a hiding?

tb

[teaboy]

now where’s that ignore button…?

[teaboy]

http://www.ticketassassin.com is a great resource. I have successfully fought 2 tickets for my wife.

good luck,
tb

[teaboy]

this just re-validates my opinion that points are a rip-off. Dont buy ’em.

tb

[teaboy]

this just re-validates my opinion that points are a rip-off. Dont buy ’em.

tb

[teaboy]

this just re-validates my opinion that points are a rip-off. Dont buy ’em.

tb

[teaboy]

this just re-validates my opinion that points are a rip-off. Dont buy ’em.

tb

[teaboy]

this just re-validates my opinion that points are a rip-off. Dont buy ’em.

tb

[teaboy]

I would guess that the following gives some pretty good insights into how US allies and other democracies see us.

http://www.guardian.co.uk/commentisfree/2011/may/03/bin-laden-death-us-patriot-reflex

“…to suggest that “justice has been done”, as President Obama did on Sunday night, seems perverse. This was not justice, it was an extra-judicial execution. If you shoot a man twice in the head you do not find him guilty. You find him dead. This was revenge. And it was served very cold indeed.

Given the nature of the 9/11 attacks a popular desire for vengeance in the US is a perfectly understandable and legitimate emotional response. It is not, however, a foreign policy. And if vengeance is a comprehensible human emotion then empathy is no less so.

Americans have a right to grieve and remember those who died on 9/11. But they have no monopoly on memory, grief or anger. Hundreds and thousands of innocent Afghanis, Iraqis and Pakistanis have been murdered as a result of America’s response to 9/11. If it’s righteous vengeance they’re after, Americans would not be first in line. Fortunately it is not a competition, and there is enough misery to go around.

But those who chant “We killed Bin Laden” cannot display their identification with American power so completely and then expect others to understand it as partial. The American military has done many things in this region. Killing Bin Laden is just one of them.

If “they” killed Bin Laden in Abbottabad then “they” also bombed a large number of wedding parties in Afghanistan, “they” murdered 24 Iraqi civilians in Haditha and “they” gang-raped a 14-year-old before murdering her, her six-year-old sister and their parents near Mahmudiyah. If “they” don’t want to be associated with the atrocities then “they” need to find more to celebrate than an assassination. Vengeance is, in no small part, what got us here. It won’t get us out.”

I’m sure lots of piggingtons could honestly say they dont share any feelings of justice or joy in the news, but I would guess they’re a vast minority. I’m not saying there’s anything wrong with that from constituents, but I feel our leaders should perhaps be a little more balanced in their rhetoric.

tb

[teaboy]

I would guess that the following gives some pretty good insights into how US allies and other democracies see us.

http://www.guardian.co.uk/commentisfree/2011/may/03/bin-laden-death-us-patriot-reflex

“…to suggest that “justice has been done”, as President Obama did on Sunday night, seems perverse. This was not justice, it was an extra-judicial execution. If you shoot a man twice in the head you do not find him guilty. You find him dead. This was revenge. And it was served very cold indeed.

Given the nature of the 9/11 attacks a popular desire for vengeance in the US is a perfectly understandable and legitimate emotional response. It is not, however, a foreign policy. And if vengeance is a comprehensible human emotion then empathy is no less so.

Americans have a right to grieve and remember those who died on 9/11. But they have no monopoly on memory, grief or anger. Hundreds and thousands of innocent Afghanis, Iraqis and Pakistanis have been murdered as a result of America’s response to 9/11. If it’s righteous vengeance they’re after, Americans would not be first in line. Fortunately it is not a competition, and there is enough misery to go around.

But those who chant “We killed Bin Laden” cannot display their identification with American power so completely and then expect others to understand it as partial. The American military has done many things in this region. Killing Bin Laden is just one of them.

If “they” killed Bin Laden in Abbottabad then “they” also bombed a large number of wedding parties in Afghanistan, “they” murdered 24 Iraqi civilians in Haditha and “they” gang-raped a 14-year-old before murdering her, her six-year-old sister and their parents near Mahmudiyah. If “they” don’t want to be associated with the atrocities then “they” need to find more to celebrate than an assassination. Vengeance is, in no small part, what got us here. It won’t get us out.”

I’m sure lots of piggingtons could honestly say they dont share any feelings of justice or joy in the news, but I would guess they’re a vast minority. I’m not saying there’s anything wrong with that from constituents, but I feel our leaders should perhaps be a little more balanced in their rhetoric.

tb

[teaboy]

I would guess that the following gives some pretty good insights into how US allies and other democracies see us.

http://www.guardian.co.uk/commentisfree/2011/may/03/bin-laden-death-us-patriot-reflex

“…to suggest that “justice has been done”, as President Obama did on Sunday night, seems perverse. This was not justice, it was an extra-judicial execution. If you shoot a man twice in the head you do not find him guilty. You find him dead. This was revenge. And it was served very cold indeed.

Given the nature of the 9/11 attacks a popular desire for vengeance in the US is a perfectly understandable and legitimate emotional response. It is not, however, a foreign policy. And if vengeance is a comprehensible human emotion then empathy is no less so.

Americans have a right to grieve and remember those who died on 9/11. But they have no monopoly on memory, grief or anger. Hundreds and thousands of innocent Afghanis, Iraqis and Pakistanis have been murdered as a result of America’s response to 9/11. If it’s righteous vengeance they’re after, Americans would not be first in line. Fortunately it is not a competition, and there is enough misery to go around.

But those who chant “We killed Bin Laden” cannot display their identification with American power so completely and then expect others to understand it as partial. The American military has done many things in this region. Killing Bin Laden is just one of them.

If “they” killed Bin Laden in Abbottabad then “they” also bombed a large number of wedding parties in Afghanistan, “they” murdered 24 Iraqi civilians in Haditha and “they” gang-raped a 14-year-old before murdering her, her six-year-old sister and their parents near Mahmudiyah. If “they” don’t want to be associated with the atrocities then “they” need to find more to celebrate than an assassination. Vengeance is, in no small part, what got us here. It won’t get us out.”

I’m sure lots of piggingtons could honestly say they dont share any feelings of justice or joy in the news, but I would guess they’re a vast minority. I’m not saying there’s anything wrong with that from constituents, but I feel our leaders should perhaps be a little more balanced in their rhetoric.

tb

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