I don't understand how my TransUnion credit rating works.
(not sure what I did at the end of last year to make it drop)
The one thing I did differently this month is than I bought AC ($4K) and paid it with my credit card. Usually my montlhy statement is $1k - $1.2k. In June, it was $5.5K. I was able to pay it off in one go because I got reserves but it feels silly to get rewarded with a higher credit score because of that. I don't net 5K a month, spending that much every month would not be sustainable in the long run. That's the part that bothers me in fact, I feel like I'm being encouraged to go in debt...
A huge factor in your score is % of total debt. Pay that down to below %10 and your score will shoot up substantially.
After that, any derogatory marks on your credit score will have an impact, and once they fall off will see your score go up by a lot. They can stick around for up to a decade, though.
Probably the next biggest impact is hard inquiries (so applying for a credit line or loan) and average length of credit history. Hard inquiries have large initial impacts but dull with time, and only stay on your report for a year or so.
Scores across the different methods (such as equifax) can vary slightly, but mostly stay in the same general ballpark of each other. 860 is extremely good. You should not go into debt. Having a zero balance won't ever hurt your score, but you DO want to utilize your credit occasionally, as having a card that has a zero balance that you literally never use CAN negatively impact your credit if the issuing company just decides to cancel it.
My credit score went down when I paid off my car. I had zero debt and my score went down! They wanted that installment payment I guess.
I don't understand how my TransUnion credit rating works.
(not sure what I did at the end of last year to make it drop)
The one thing I did differently this month is than I bought AC ($4K) and paid it with my credit card. Usually my montlhy statement is $1k - $1.2k. In June, it was $5.5K. I was able to pay it off in one go because I got reserves but it feels silly to get rewarded with a higher credit score because of that. I don't net 5K a month, spending that much every month would not be sustainable in the long run. That's the part that bothers me in fact, I feel like I'm being encouraged to go in debt...
A huge factor in your score is % of total debt. Pay that down to below %10 and your score will shoot up substantially.
After that, any derogatory marks on your credit score will have an impact, and once they fall off will see your score go up by a lot. They can stick around for up to a decade, though.
Probably the next biggest impact is hard inquiries (so applying for a credit line or loan) and average length of credit history. Hard inquiries have large initial impacts but dull with time, and only stay on your report for a year or so.
Scores across the different methods (such as equifax) can vary slightly, but mostly stay in the same general ballpark of each other. 860 is extremely good. You should not go into debt. Having a zero balance won't ever hurt your score, but you DO want to utilize your credit occasionally, as having a card that has a zero balance that you literally never use CAN negatively impact your credit if the issuing company just decides to cancel it.
My credit score went down when I paid off my car. I had zero debt and my score went down! They wanted that installment payment I guess.
Loans are considered active accounts, with the amount of the loan contributing to your total available credit. So paying one off can impact your score by lowering your average credit history, and can also raise your total % of debt utilization if your other accounts carry a sizable balance.
Let's say you have a credit card with a $1000 dollar total balance, and a car loan of $9000. You have a balance on the card of $500, so your report would say you have a total credit limit of $10000, and a utilization of 5%. Then you pay off the car loan, which closes your account. Your credit limit goes down to $1000, so that $500 dollar balance brings your debt utilization from 5% to 50%.
Per Transunion, my Transunion credit score is negatively affected by not having a mortgage. So that’s neat.
Civics is not a consumer product that you can ignore because you don’t like the options presented.
0
SixCaches Tweets in the mainframe cyberhexRegistered Userregular
Worrying about your score above 800 is pointless. Unless you’re one of those nutcases that wants a perfect credit score for its own sake, just keep doing what you’re doing and only check it to make sure that there’s isn’t something fraudulent or that you otherwise aren’t aware of that might be affecting things.
Has anyone signed up for the Amex platinum recently for their signup bonus? I'm thinking of doing it, since I should pretty easily hit the spending threshold to get the signup bonus, but not sure I really want another card with that high of an annual fee. Anyone have any thoughts on this?
It’s a great card if you can use the benefits. You can easily get $550/year of value in it if you travel a lot, for instance. Lounge access and and the airline and Uber credits can pay for it, basically.
With quarantine that might be harder to do, though. I haven’t gotten on a plane since March, so there’s way less opportunity for me to get value from it, for instance.
don't think I'd really take advantage of the benefits. I already have a sapphire reserve which has similar lounge access and Lyft credits. That being said I have some large bills I can pay by credit card with no extra fee, so I'd like to get more out of it than the 1.5% cash back from my chase unlimited. Any ideas?
1. Average age of accounts (longer = better)
2. Number of accounts (more = better)
3. Credit utilization of credit lines (sum of balances on credit cards/lines divided by sum of limits of cards/lines) (lower = better)
4. Payment history (reported delinquencies, all total payments)
5. “Recent” Credit inquiries (if the lender is in the “home loans” business these ding you less, and multiple inquiries from the same lender within a reporting period only count as one)
That’s the traditional model for FICO
Each agency also has their own proprietary scores and models using alternate data and logarithms so they can sell multiple different types of scores to different types of clients
Captain Inertia on
0
SixCaches Tweets in the mainframe cyberhexRegistered Userregular
Has anyone signed up for the Amex platinum recently for their signup bonus? I'm thinking of doing it, since I should pretty easily hit the spending threshold to get the signup bonus, but not sure I really want another card with that high of an annual fee. Anyone have any thoughts on this?
It’s a great card if you can use the benefits. You can easily get $550/year of value in it if you travel a lot, for instance. Lounge access and and the airline and Uber credits can pay for it, basically.
With quarantine that might be harder to do, though. I haven’t gotten on a plane since March, so there’s way less opportunity for me to get value from it, for instance.
don't think I'd really take advantage of the benefits. I already have a sapphire reserve which has similar lounge access and Lyft credits. That being said I have some large bills I can pay by credit card with no extra fee, so I'd like to get more out of it than the 1.5% cash back from my chase unlimited. Any ideas?
The 1.5% cash back is really good and while I’m no churning expert, that’s a pretty good rate in a vacuum especially for cash and without any additional headaches of opening new cards and worrying about minimum spends as well as points vs cash and how to best use them.
Has anyone signed up for the Amex platinum recently for their signup bonus? I'm thinking of doing it, since I should pretty easily hit the spending threshold to get the signup bonus, but not sure I really want another card with that high of an annual fee. Anyone have any thoughts on this?
It’s a great card if you can use the benefits. You can easily get $550/year of value in it if you travel a lot, for instance. Lounge access and and the airline and Uber credits can pay for it, basically.
With quarantine that might be harder to do, though. I haven’t gotten on a plane since March, so there’s way less opportunity for me to get value from it, for instance.
don't think I'd really take advantage of the benefits. I already have a sapphire reserve which has similar lounge access and Lyft credits. That being said I have some large bills I can pay by credit card with no extra fee, so I'd like to get more out of it than the 1.5% cash back from my chase unlimited. Any ideas?
The 1.5% cash back is really good and while I’m no churning expert, that’s a pretty good rate in a vacuum especially for cash and without any additional headaches of opening new cards and worrying about minimum spends as well as points vs cash and how to best use them.
Basically, if it were me, I’d just do that.
The other option is the Chase Double Cash Back card, since you'll get rewards for paying the card as well as purchases.
I've been getting the most use out of my Amazon card lately, as most of my shopping has been online for obvious reasons. The 5% cash back is very good. At this rate I'll be able to do most of my xmas shopping just on points.
Bank of America cash rewards is good too. You can set a spending category to get extra money back from each month (“online” being one of the categories), and you also get extra money based on how much in deposits you have with them and Merrill Lynch. The thing that makes it work is that stock holdings count as deposits. Check it out.
I have the chase amazon card too, it's certainly saved me a good chunk of change. This quarter the chase freedom is 5% back at amazon though, which is better for me.
1.5% back is decent, and since it's in the chase ecosystem and i have the reserve i can redeem at a 2.25% rate towards travel which is a nice plus. But, seems like a missed opportunity considering the circumstances
Is anyone here still waiting on their federal tax return? I filed mine a week or two before the July deadline, but I have not received any money back. My state return was relatively quick.
If you haven't already checked, I'd go to the "Where's My Refund?" page (https://www.irs.gov/refunds). It's not always all that helpful, but occasionally they'll tell you something useful, if they're missing info from you, for example.
Well, just had the fun of signing a ton of paperwork for a refinance. All that paperwork never gets any less terrifying.
Anyway, our credit union now owns the mortgage instead of Wells Fargo, and we're down to a 2.5% interest rate. I call that a win.
We are also trying to get away from WF. Planning to do some serious looking tonight and over the Holiday.
Then we can clean up our credit cards a little.
0
y2jake215certified Flat Birther theoristthe Last Good Boy onlineRegistered Userregular
Question - I recently bought a few shares of a Vanguard ETF. Over the last few days it's fallen, so I'm currently at a loss.
I also (more recently) opened a Vanguard Roth IRA as I realized it probably makes more sense at the moment for long term investments. Does it make sense to sell the ETF shares at a loss, to immediately buy them in the Roth IRA?
It seems like this wouldn't make any difference (there are no fees, maybe a couple bucks having to sell a bit lower and buy a tiny bit higher) and then I would get the tax benefit... am I missing something?
maybe i'm streaming terrible dj right now if i am its here
Question - I recently bought a few shares of a Vanguard ETF. Over the last few days it's fallen, so I'm currently at a loss.
I also (more recently) opened a Vanguard Roth IRA as I realized it probably makes more sense at the moment for long term investments. Does it make sense to sell the ETF shares at a loss, to immediately buy them in the Roth IRA?
It seems like this wouldn't make any difference (there are no fees, maybe a couple bucks having to sell a bit lower and buy a tiny bit higher) and then I would get the tax benefit... am I missing something?
That would count as a wash sale, and you would not get the tax benefit.
Your individual circumstances and bank/credit union will fiddle with it a bit. We got a rate lock on our new 20 year mortgage at 2.875 a week or two ago. (Still in all the paperwork) Which is slightly worse than the amount that I was quoted the week prior, but currently slightly better than what's on offer today since things bounce around. All of the bouncing is well within 0.25% as a range, though, and regardless is significantly better than the 4.375% 30 year we started with 3 years ago. Which is the main thing to focus on rather than kicking yourself for being off by a day and paying 0.125% more in interest than you might have. We'll be paying a little less per month and for 7 fewer years now. Which is a shitload of interest savings.
*Edit*
Also, like Hedge said, go complain about that 0.125% difference to your parents who bought in the 80's when Volker was trying to kill inflation. They'll just look at you.
moniker on
+4
y2jake215certified Flat Birther theoristthe Last Good Boy onlineRegistered Userregular
Question - I recently bought a few shares of a Vanguard ETF. Over the last few days it's fallen, so I'm currently at a loss.
I also (more recently) opened a Vanguard Roth IRA as I realized it probably makes more sense at the moment for long term investments. Does it make sense to sell the ETF shares at a loss, to immediately buy them in the Roth IRA?
It seems like this wouldn't make any difference (there are no fees, maybe a couple bucks having to sell a bit lower and buy a tiny bit higher) and then I would get the tax benefit... am I missing something?
That would count as a wash sale, and you would not get the tax benefit.
Oh sorry - I just mean on future gains for being in a Roth as opposed to E-trade, not as a tax write off
maybe i'm streaming terrible dj right now if i am its here
I’m still waiting on our refinance underwriting to go through, but supposedly we are locked in to a 2.75% 30 yr.
Things are changing fast though. When I started looking like a month or so ago all the normal banks were quoting around 3.25%.
Now I get fliers claiming other banks will give me 2.25-2.5% (30 yr). Most of them look like scams so I haven’t bothered to get estimates, but it seems like people are desperate to get some more stable loans on their books, so if you have good credit, there is a real opportunity to save money.
Jebus314 on
"The world is a mess, and I just need to rule it" - Dr Horrible
+2
y2jake215certified Flat Birther theoristthe Last Good Boy onlineRegistered Userregular
I got a mortgage locked in at 2.5% (not a refi). Its wild out here.
Does it make more sense not to rush to pay off the mortgage as I originally intended when it’s so low, and invest instead?
maybe i'm streaming terrible dj right now if i am its here
I got a mortgage locked in at 2.5% (not a refi). Its wild out here.
Does it make more sense not to rush to pay off the mortgage as I originally intended when it’s so low, and invest instead?
At this point, yeah. We were paying an extra $100/month on our 30 year, but when we move to the 2.875% 20 year the rate of return on that extra $100/month is just so much lower than what we are likely to get compared to any mutual fund. Plus the number of years we'd be lopping off are just not enough to really be worth it in comparison. Besides, so long as we don't put that extra $100 into a retirement account with all the rules around that we can lump sum that money on the mortgage after, say, 15 years regardless.
Due to my job we have a mortgage broker that offers loans that are usually about a point under the going rate with a few catches -
- they only finance loans up to 450k or so
- they only set rates twice a year - August and February
We live 14 miles from NYC and the market is going insane.
Our goal right now is either to do a straight refi to another 30 year loan (we're about 6 years into a 4.5% loan) take out an extra 15 or so and get a new boiler before the winter.
Or
Take out as much as we can on a refi, have our payment go up modestly but consolidate all of our other debts and lower our overhead substantially. But that involves timing the market to an extent.
RedTide#1907 on Battle.net
Come Overwatch with meeeee
Cant speak to the broader points, but if you think you need a new furnace or hot water heater I'd definitely say to do that shit now. With the rate things are going we'll have some newly invented meteorological term for, like, a blizzard typhoon or something hitting before January.
Cant speak to the broader points, but if you think you need a new furnace or hot water heater I'd definitely say to do that shit now. With the rate things are going we'll have some newly invented meteorological term for, like, a blizzard typhoon or something hitting before January.
Oh that gets done (along with having our electrical service redone/upgraded) whether this is a modest refi or a go for broke one.
RedTide#1907 on Battle.net
Come Overwatch with meeeee
0
HedgethornAssociate Professor of Historical Hobby HorsesIn the Lions' DenRegistered Userregular
I got a mortgage locked in at 2.5% (not a refi). Its wild out here.
Does it make more sense not to rush to pay off the mortgage as I originally intended when it’s so low, and invest instead?
I'm certainly not a finance expert, but it seems to me on a strictly economic basis you should not prepay a single penny early on a 2.5% loan. You're so close to the federal reserve's 2% target inflation rate that you're barely paying any real interest at all at that point. If the Fed ever manages to push inflation up to 3% for a while like they've announced they hope to do, then in inflation-adjusted dollars you'd be paying back less than you borrowed.
(Someone correct me if I'm wrong about that. )
Of course, there's a psychological value to owning your home outright and knowing you no longer owe anyone for it, and so prepaying might be of worth in that sense. But you'd be paying a (tiny) economic cost for that psychological wellbeing.
I got a mortgage locked in at 2.5% (not a refi). Its wild out here.
Does it make more sense not to rush to pay off the mortgage as I originally intended when it’s so low, and invest instead?
I'm certainly not a finance expert, but it seems to me on a strictly economic basis you should not prepay a single penny early on a 2.5% loan. You're so close to the federal reserve's 2% target inflation rate that you're barely paying any real interest at all at that point. If the Fed ever manages to push inflation up to 3% for a while like they've announced they hope to do, then in inflation-adjusted dollars you'd be paying back less than you borrowed.
(Someone correct me if I'm wrong about that. )
Of course, there's a psychological value to owning your home outright and knowing you no longer owe anyone for it, and so prepaying might be of worth in that sense. But you'd be paying a (tiny) economic cost for that psychological wellbeing.
I'm pretty sure paying it off early always means you're paying less in total regardless of what is going on with inflation.
I got a mortgage locked in at 2.5% (not a refi). Its wild out here.
Does it make more sense not to rush to pay off the mortgage as I originally intended when it’s so low, and invest instead?
I'm certainly not a finance expert, but it seems to me on a strictly economic basis you should not prepay a single penny early on a 2.5% loan. You're so close to the federal reserve's 2% target inflation rate that you're barely paying any real interest at all at that point. If the Fed ever manages to push inflation up to 3% for a while like they've announced they hope to do, then in inflation-adjusted dollars you'd be paying back less than you borrowed.
(Someone correct me if I'm wrong about that. )
Of course, there's a psychological value to owning your home outright and knowing you no longer owe anyone for it, and so prepaying might be of worth in that sense. But you'd be paying a (tiny) economic cost for that psychological wellbeing.
Though the eventual resumption of inflation also pressumes an annual COLA that keeps pace. But yeah, at ~2.blah% there is a very real possibility of your yearly raise exceeding your mortgage interest rate. Which... is kind of just insane.
I got a mortgage locked in at 2.5% (not a refi). Its wild out here.
Does it make more sense not to rush to pay off the mortgage as I originally intended when it’s so low, and invest instead?
I'm certainly not a finance expert, but it seems to me on a strictly economic basis you should not prepay a single penny early on a 2.5% loan. You're so close to the federal reserve's 2% target inflation rate that you're barely paying any real interest at all at that point. If the Fed ever manages to push inflation up to 3% for a while like they've announced they hope to do, then in inflation-adjusted dollars you'd be paying back less than you borrowed.
(Someone correct me if I'm wrong about that. )
Of course, there's a psychological value to owning your home outright and knowing you no longer owe anyone for it, and so prepaying might be of worth in that sense. But you'd be paying a (tiny) economic cost for that psychological wellbeing.
I'm pretty sure paying it off early always means you're paying less in total regardless of what is going on with inflation.
It's the difference in opportunity cost, though. Don't take that extra monthly payment you were going to make and spend it on Taco Bell instead, just use it for a different savings vehicle than paying down your mortgage early.
Because the return on a ~$100/mo extra mortgage payment is going to be that 2.5% fixed rate. Meanwhile a ~$100/mo investment into an S&P500 index fund is likely to get a ~6% return. Especially over a timeframe like 30 years. (Barring societal collapse, but at that point your property deed is also worthless. So...) And, again, so long as you aren't putting that extra savings into a retirement account, you can just pull out all the thousands of dollars it turned into after 15-20 years of the higher rate of return in an index fund and put that towards what's left of your mortgage as a lump sum.
Because the return on a ~$100/mo extra mortgage payment is going to be that 2.5% fixed rate. Meanwhile a ~$100/mo investment into an S&P500 index fund is likely to get a ~6% return. Especially over a timeframe like 30 years. (Barring societal collapse, but at that point your property deed is also worthless. So...) And, again, so long as you aren't putting that extra savings into a retirement account, you can just pull out all the thousands of dollars it turned into after 15-20 years of the higher rate of return in an index fund and put that towards what's left of your mortgage as a lump sum.
Of note: you can set up a separate Roth IRA account and dump $100/month into it until the contributions equal the remaining balance on your mortgage. If you're past the age for penalty-free withdrawal by that point, you can also withdraw the interest and knock out the mortgage. Just make sure you're tracking it properly, since that contribution counts toward your total Roth limit in a given year.
Ugh. Wife and I both have excellent credit but we can't seem to get below 2.875 on our refi. Part of that is because the numbers for a 15yr refi are just out of our budget.
The best offer we've seen so far is from Rocket Mortgage. Yes we are checking local credit unions. (I'm mostly just venting)
Also I really just want to get away from WF. Mortgages seem to be the only part of their portfolio they haven't been dinged on yet.
Ugh. Wife and I both have excellent credit but we can't seem to get below 2.875 on our refi. Part of that is because the numbers for a 15yr refi are just out of our budget.
The best offer we've seen so far is from Rocket Mortgage. Yes we are checking local credit unions. (I'm mostly just venting)
Also I really just want to get away from WF. Mortgages seem to be the only part of their portfolio they haven't been dinged on yet.
2.875 is pretty fucking good. Let’s not miss the forest for the trees here.
Lowest actual offer we got was 2.75 (also from rocket mortgage). And that’s like 3 weeks into the process and still hasn’t finalized.
Other things (besides credit) that will affect the loan rate is the LTV (loan to value) ratio. We are down below 70% or so, based on current market value (meaning remaining loan amount is only about 70% of the money we could get if we sold today).
And of course location. Highly unlikely my neighborhood (as a desirable place in a major city) will see any dips in home values.
Jebus314 on
"The world is a mess, and I just need to rule it" - Dr Horrible
Ugh. Wife and I both have excellent credit but we can't seem to get below 2.875 on our refi. Part of that is because the numbers for a 15yr refi are just out of our budget.
The best offer we've seen so far is from Rocket Mortgage. Yes we are checking local credit unions. (I'm mostly just venting)
Also I really just want to get away from WF. Mortgages seem to be the only part of their portfolio they haven't been dinged on yet.
From what I've heard most of the numbers around 2.5% or lower are with purchased points anyways. Or is 2.875 the best you can get even with buying points?
Posts
My credit score went down when I paid off my car. I had zero debt and my score went down! They wanted that installment payment I guess.
Selling Board Games for Medical Bills
Loans are considered active accounts, with the amount of the loan contributing to your total available credit. So paying one off can impact your score by lowering your average credit history, and can also raise your total % of debt utilization if your other accounts carry a sizable balance.
Let's say you have a credit card with a $1000 dollar total balance, and a car loan of $9000. You have a balance on the card of $500, so your report would say you have a total credit limit of $10000, and a utilization of 5%. Then you pay off the car loan, which closes your account. Your credit limit goes down to $1000, so that $500 dollar balance brings your debt utilization from 5% to 50%.
Neither does TransUnion.
Per Transunion, my Transunion credit score is negatively affected by not having a mortgage. So that’s neat.
don't think I'd really take advantage of the benefits. I already have a sapphire reserve which has similar lounge access and Lyft credits. That being said I have some large bills I can pay by credit card with no extra fee, so I'd like to get more out of it than the 1.5% cash back from my chase unlimited. Any ideas?
2. Number of accounts (more = better)
3. Credit utilization of credit lines (sum of balances on credit cards/lines divided by sum of limits of cards/lines) (lower = better)
4. Payment history (reported delinquencies, all total payments)
5. “Recent” Credit inquiries (if the lender is in the “home loans” business these ding you less, and multiple inquiries from the same lender within a reporting period only count as one)
That’s the traditional model for FICO
Each agency also has their own proprietary scores and models using alternate data and logarithms so they can sell multiple different types of scores to different types of clients
The 1.5% cash back is really good and while I’m no churning expert, that’s a pretty good rate in a vacuum especially for cash and without any additional headaches of opening new cards and worrying about minimum spends as well as points vs cash and how to best use them.
Basically, if it were me, I’d just do that.
The other option is the Chase Double Cash Back card, since you'll get rewards for paying the card as well as purchases.
1.5% back is decent, and since it's in the chase ecosystem and i have the reserve i can redeem at a 2.25% rate towards travel which is a nice plus. But, seems like a missed opportunity considering the circumstances
Anyway, our credit union now owns the mortgage instead of Wells Fargo, and we're down to a 2.5% interest rate. I call that a win.
We are also trying to get away from WF. Planning to do some serious looking tonight and over the Holiday.
Then we can clean up our credit cards a little.
I also (more recently) opened a Vanguard Roth IRA as I realized it probably makes more sense at the moment for long term investments. Does it make sense to sell the ETF shares at a loss, to immediately buy them in the Roth IRA?
It seems like this wouldn't make any difference (there are no fees, maybe a couple bucks having to sell a bit lower and buy a tiny bit higher) and then I would get the tax benefit... am I missing something?
maybe i'm streaming terrible dj right now if i am its here
That would count as a wash sale, and you would not get the tax benefit.
Oh wow! My cu is still at 3.125 for no points.
We dropped to a 15 year, which had better rates, and the underwriting took so long they just shifted us from 2.625 to 2.5 as an apology
30 year: 2.93%
15 year: 2.42%
Both are down nearly 0.60 points from a year ago. 30 year ticked up 0.02 while 15 year ticked down 0.04
http://www.freddiemac.com/pmms/
To get a sense of the broader market.
Your individual circumstances and bank/credit union will fiddle with it a bit. We got a rate lock on our new 20 year mortgage at 2.875 a week or two ago. (Still in all the paperwork) Which is slightly worse than the amount that I was quoted the week prior, but currently slightly better than what's on offer today since things bounce around. All of the bouncing is well within 0.25% as a range, though, and regardless is significantly better than the 4.375% 30 year we started with 3 years ago. Which is the main thing to focus on rather than kicking yourself for being off by a day and paying 0.125% more in interest than you might have. We'll be paying a little less per month and for 7 fewer years now. Which is a shitload of interest savings.
*Edit*
Also, like Hedge said, go complain about that 0.125% difference to your parents who bought in the 80's when Volker was trying to kill inflation. They'll just look at you.
Oh sorry - I just mean on future gains for being in a Roth as opposed to E-trade, not as a tax write off
maybe i'm streaming terrible dj right now if i am its here
Things are changing fast though. When I started looking like a month or so ago all the normal banks were quoting around 3.25%.
Now I get fliers claiming other banks will give me 2.25-2.5% (30 yr). Most of them look like scams so I haven’t bothered to get estimates, but it seems like people are desperate to get some more stable loans on their books, so if you have good credit, there is a real opportunity to save money.
Does it make more sense not to rush to pay off the mortgage as I originally intended when it’s so low, and invest instead?
maybe i'm streaming terrible dj right now if i am its here
I'd love to switch to from a 30 year at 3.8 to a 20 year at 2.5.
At this point, yeah. We were paying an extra $100/month on our 30 year, but when we move to the 2.875% 20 year the rate of return on that extra $100/month is just so much lower than what we are likely to get compared to any mutual fund. Plus the number of years we'd be lopping off are just not enough to really be worth it in comparison. Besides, so long as we don't put that extra $100 into a retirement account with all the rules around that we can lump sum that money on the mortgage after, say, 15 years regardless.
- they only finance loans up to 450k or so
- they only set rates twice a year - August and February
We live 14 miles from NYC and the market is going insane.
Our goal right now is either to do a straight refi to another 30 year loan (we're about 6 years into a 4.5% loan) take out an extra 15 or so and get a new boiler before the winter.
Or
Take out as much as we can on a refi, have our payment go up modestly but consolidate all of our other debts and lower our overhead substantially. But that involves timing the market to an extent.
Come Overwatch with meeeee
Oh that gets done (along with having our electrical service redone/upgraded) whether this is a modest refi or a go for broke one.
Come Overwatch with meeeee
I'm certainly not a finance expert, but it seems to me on a strictly economic basis you should not prepay a single penny early on a 2.5% loan. You're so close to the federal reserve's 2% target inflation rate that you're barely paying any real interest at all at that point. If the Fed ever manages to push inflation up to 3% for a while like they've announced they hope to do, then in inflation-adjusted dollars you'd be paying back less than you borrowed.
(Someone correct me if I'm wrong about that. )
Of course, there's a psychological value to owning your home outright and knowing you no longer owe anyone for it, and so prepaying might be of worth in that sense. But you'd be paying a (tiny) economic cost for that psychological wellbeing.
I'm pretty sure paying it off early always means you're paying less in total regardless of what is going on with inflation.
Though the eventual resumption of inflation also pressumes an annual COLA that keeps pace. But yeah, at ~2.blah% there is a very real possibility of your yearly raise exceeding your mortgage interest rate. Which... is kind of just insane.
It's the difference in opportunity cost, though. Don't take that extra monthly payment you were going to make and spend it on Taco Bell instead, just use it for a different savings vehicle than paying down your mortgage early.
Because the return on a ~$100/mo extra mortgage payment is going to be that 2.5% fixed rate. Meanwhile a ~$100/mo investment into an S&P500 index fund is likely to get a ~6% return. Especially over a timeframe like 30 years. (Barring societal collapse, but at that point your property deed is also worthless. So...) And, again, so long as you aren't putting that extra savings into a retirement account, you can just pull out all the thousands of dollars it turned into after 15-20 years of the higher rate of return in an index fund and put that towards what's left of your mortgage as a lump sum.
Of note: you can set up a separate Roth IRA account and dump $100/month into it until the contributions equal the remaining balance on your mortgage. If you're past the age for penalty-free withdrawal by that point, you can also withdraw the interest and knock out the mortgage. Just make sure you're tracking it properly, since that contribution counts toward your total Roth limit in a given year.
The best offer we've seen so far is from Rocket Mortgage. Yes we are checking local credit unions. (I'm mostly just venting)
Also I really just want to get away from WF. Mortgages seem to be the only part of their portfolio they haven't been dinged on yet.
2.875 is pretty fucking good. Let’s not miss the forest for the trees here.
Lowest actual offer we got was 2.75 (also from rocket mortgage). And that’s like 3 weeks into the process and still hasn’t finalized.
Other things (besides credit) that will affect the loan rate is the LTV (loan to value) ratio. We are down below 70% or so, based on current market value (meaning remaining loan amount is only about 70% of the money we could get if we sold today).
And of course location. Highly unlikely my neighborhood (as a desirable place in a major city) will see any dips in home values.
From what I've heard most of the numbers around 2.5% or lower are with purchased points anyways. Or is 2.875 the best you can get even with buying points?