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Cha-ching, it's the [Financial Literacy] thread

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    monikermoniker Registered User regular
    Jebus314 wrote: »
    Mugsley wrote: »
    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.

    Yeah, 2.875% is still below the PMMS survey for Freddie Mac and what we are getting.

    But, also, go somewhere that isn't Wells Fargo just because fuck Wells Fargo. The same rate will be the same rate at another bank/ credit union, maybe just a bit more paperwork to fill out. Which is probably worth it to have a lower risk of being involved in wire fraud.

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    MugsleyMugsley DelawareRegistered User regular
    Simpsonia wrote: »
    Mugsley wrote: »
    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?

    No points for that.

    Yeah I admit I'm completely jaded about our rate. I'm waiting on a couple replies but we'll likely pull the trigger in the morning.

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    schussschuss Registered User regular
    Yeah, below 2.8 probably isn't happening on a 30 yr from what I've seen. We got 2.55 on a 15. No points or other stuff other than a waived appraisal (as we refid with our current lender)

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    DisruptedCapitalistDisruptedCapitalist I swear! Registered User regular
    How much are the costs of refinancing usually?

    "Simple, real stupidity beats artificial intelligence every time." -Mustrum Ridcully in Terry Pratchett's Hogfather p. 142 (HarperPrism 1996)
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    Jebus314Jebus314 Registered User regular
    How much are the costs of refinancing usually?

    From what I gathered it's typically around $3k for non recoverable costs. That is, $3k is money you would not have otherwise paid, but are now paying to switch to a new loan. Things like appraisal fee, loan application fee, title transfer fee, points, etc. $3k being the value for a so called "no points" loan, although weirdly they still put the loan origination fee under the points category in the standard loan offer forms.

    Then there is usually a requirement for 6 months to a years worth of taxes be paid up front (during closing), plus 2-4 months of interest paid up front. This can be up to $10k, but it's all money that you would have paid anyway. So it just lowers your monthly payment for the first year buy a huge amount (until you've used up all the money you paid up front).

    Also, basically everyone offers the ability to roll almost all of the loan costs into the loan itself. So instead of a $200k loan, plus $3k in fees (out of pocket), plus $8k in pre-paid taxes/interst (out of pocket), you would instead just get a $211k loan. Only things not usually allowed to be rolled into the loan are appraisal fee and title transfer fee (totaling somewhere around $200 - $500).

    Rolling everything into the loan means you are paying interest on the additional fee's and prepaids, but when I was looking at the numbers, it usually only resulted in a few hundred to at most a $1k difference after 2 years. As in, you end up paying an extra $500 ish for the refi if you roll all of the costs into the loan, instead of paying it all out of pocket. This of course assumes that you don't invest all of that out of pocket money that you saved by rolling the costs into the loan, which could offset the extra money paid in interest. In the end it just wasn't worth considering and rolling everything into the loan seemed easier.

    "The world is a mess, and I just need to rule it" - Dr Horrible
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    MugsleyMugsley DelawareRegistered User regular
    The taxes portion is just your escrow. If you're refinancing, you're basically rolling the refund from your existing escrow balance into setting up the new escrow account.

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    JragghenJragghen Registered User regular
    Yeah, but when changing banks, you typically pay to fund the escrow (so insurance + taxes) out of pocket, then get a check from your old escrow account balance. Funding escrow ended up being ~75% of everything I had to pay.

    What you're paying out-of-pocket are application fees (will vary depending on lender), services (appraisal, if needed, credit report, flood cert, endorsement fee, title settlement, etc). Most of those are fixed price and won't vary depending on who you're with - I think a lot of them are set by who has your title, so if they're high you're kinda SOL depending on who has the title.

    Basically, I'd ballpark assuming it'll cost you a couple grand, with some expected variance baked in, but what you'll actually have to pay out of pocket will be more dictated by what your property taxes are.

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    MugsleyMugsley DelawareRegistered User regular
    Jragghen wrote: »
    Yeah, but when changing banks, you typically pay to fund the escrow (so insurance + taxes) out of pocket, then get a check from your old escrow account balance. Funding escrow ended up being ~75% of everything I had to pay.

    What you're paying out-of-pocket are application fees (will vary depending on lender), services (appraisal, if needed, credit report, flood cert, endorsement fee, title settlement, etc). Most of those are fixed price and won't vary depending on who you're with - I think a lot of them are set by who has your title, so if they're high you're kinda SOL depending on who has the title.

    Basically, I'd ballpark assuming it'll cost you a couple grand, with some expected variance baked in, but what you'll actually have to pay out of pocket will be more dictated by what your property taxes are.

    This is all true. I was expecting about 2% of our mortgage value in fees to refi

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    Al_watAl_wat Registered User regular
    edited September 2020
    This is more of a Canadian specific question. I'm looking at investing in some ETFs in both RRSP and TFSA accounts. I've noticed that similar funds - e.g. VOO (listed in USD on NYSE) and VFV (CAD on TSX) have differing MERs (in this case - 0.03 vs 0.08). The difference can be even larger for other ETFs. I'm considering converting CAD to USD using Norberts gambit and buying the U.S. listed ETF for the lower fees. I'd stick the U.S. listed ETFs into RRSPs to avoid the u.s. withholding tax on dividends (apparently we still lose 15% tax on us dividends in a TFSA).

    With the CAD not especially high right now, I'd be assuming the risk of the CAD being a lot higher years from now when i need to sell and convert back to CAD.

    Maybe for the portion of my investment that i want to devote to VOO, i should instead do 50/50 VOO/VFV.

    Anyone have any opinions on this?

    Al_wat on
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    thatassemblyguythatassemblyguy Janitor of Technical Debt .Registered User regular
    Al_wat wrote: »
    This is more of a Canadian specific question. I'm looking at investing in some ETFs in both RRSP and TFSA accounts. I've noticed that similar funds - e.g. VOO (listed in USD on NYSE) and VFV (CAD on TSX) have differing MERs (in this case - 0.03 vs 0.08). The difference can be even larger for other ETFs. I'm considering converting CAD to USD using Norberts gambit and buying the U.S. listed ETF for the lower fees. I'd stick the U.S. listed ETFs into RRSPs to avoid the u.s. withholding tax on dividends (apparently we still lose 15% tax on us dividends in a TFSA).

    With the CAD not especially high right now, I'd be assuming the risk of the CAD being a lot higher years from now when i need to sell and convert back to CAD.

    Maybe for the portion of my investment that i want to devote to VOO, i should instead do 50/50 VOO/VFV.

    Anyone have any opinions on this?

    Without looking at it too deeply, I would wager the slightly higher expense ratio is due to the cost of maintaining US stocks (S&P500) on a Canadian exchange. Off the hip guess with zero research done, by the way.

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    Space PickleSpace Pickle Registered User regular
    You would do better by putting VOO in an RRSP because you can avoid paying the foreign withholding tax, but IMO it isn't worth worrying about when the cost of investing is already so low. I hold VFV.

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    PhyphorPhyphor Building Planet Busters Tasting FruitRegistered User regular
    You will lose a little bit with the gambit, it's probably not really worth it to get a 0.05 difference. You would do that if you had much higher fees and/or specifically wanted a US dollar denominated investment to bet against $CAD

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    Al_watAl_wat Registered User regular
    edited September 2020
    The difference is even worse for some other ETFs. Take a look at:
    • Vanguard US Total Market ETF (Instrument ExchangeTSX: VUN-T) MER: 0.15%
    • Total Stock Market ETF Vanguard (Instrument ExchangeNYSE Arca: VTI-A) MER: 0.03%

    These track the same index.

    It does make sense that they would have slightly higher MERs on Canadian exchanges, but I question if the difference is worth it in some cases, like this. VOO vs VFV might not be such a big deal.

    Also, thanks for the advice and opinions everyone!

    Al_wat on
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    thatassemblyguythatassemblyguy Janitor of Technical Debt .Registered User regular
    Phyphor wrote: »
    You will lose a little bit with the gambit, it's probably not really worth it to get a 0.05 difference. You would do that if you had much higher fees and/or specifically wanted a US dollar denominated investment to bet against $CAD

    In addition to that right now is probably not a good time to be betting ON the USA.

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    Al_watAl_wat Registered User regular
    Phyphor wrote: »
    You will lose a little bit with the gambit, it's probably not really worth it to get a 0.05 difference. You would do that if you had much higher fees and/or specifically wanted a US dollar denominated investment to bet against $CAD

    In addition to that right now is probably not a good time to be betting ON the USA.

    yeah, thats definitely a concern. I'm looking at long term investments though, and trying to come up with my overall long term strategy.

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    Shazkar ShadowstormShazkar Shadowstorm Registered User regular
    i finally got around to looking at my roth 401k options and switched most of my savings to that because i said i would for a year and never did and apparently we've had this as an option at my company since 2018 oops

    oops!!!

    poo
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    Phoenix-DPhoenix-D Registered User regular
    Credit score reported by bank: 741. Credit score reported by lender: 678. oookday then.

    Looks like the lender is freaking out over the car loan process from earlier in the year. They're treating each application as a separate credit pull despite being almost simultaneous with each other (because they were sent at the same time for a rate check). So either the lender is off the rails or the car dealership screwed up. Or both. Whee!

    Doesn't matter much right now thankfully but erg.

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    honoverehonovere Registered User regular
    edited September 2020
    To help a bit with our retirement fund in addition to our pension insurance (we're in Germany), we are looking into some saving plans? Our bank offers a bunch of options to build your own plan. So we're probably looking at ETFs, mostly, I guess at the moment. What are some good pointers to decide on a certain ETF. I would like to keep it at least a bit ethical (as far as that's realistic, I know) So probably Screened or SRI.

    Still there are a lot of options from different providers in addition to which ones are currently "on sale" with the bank, and as such waiving the 1,5% fee for each payment for at least some time.

    Also does it make sense to mix the plan with several ETFs and maybe also other options like bonds?

    Alternatively the bank also offers the robo-advsior option when investing at least 3k right at the start with 0,97% monthly fee. Might also look into that.

    honovere on
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    a5ehrena5ehren AtlantaRegistered User regular
    edited September 2020
    A 1% monthly fee is highway robbery, don't do that. You could talk me into 1% annual if there aren't any other good options.

    Without knowing literally anything about investing in Germany, I'd say that surely there is some kind of Vanguard/Fidelity equivalent low-cost source for investing? Hopefully? If you're looking for an "ethical/green" fund, most major trading houses have a fund for that - just be prepared for the somewhat higher expense fees and a return that differs from the wider market.

    a5ehren on
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    ShadowhopeShadowhope Baa. Registered User regular
    edited September 2020
    Canadian here: Would there be any particular drawback or advantage to replicating an index fund through stock purchases, putting the stocks into a TFSA?

    Say that I wanted to replicate the S&P TSX 60 Index, and that every two paychecks I bought between $1,000 and $1,500 in stock in a different one of those companies. In a little over two years, I’d be able to match the holdings of the index, give or take stocks being added and removed.

    Obviously, there are ETFs that would just match the index with no further action needed on my part - most of my TFSA is currently ETF index funds. They do have annual fees though, though those fees should be fairly small. Basically, do I keep on buying index fund ETFs, or is there any merit to buying the stocks directly with an eye towards matching their holdings? And does any of this change when I run out of contribution room in my TFSA?

    EDIT: And to be clear, the goal wouldn’t really be to maintain a 1:1 equivalence to the S&P TSX 60; it’d be to use it as a guide towards ensuring I was diversified across industry sectors. As things got added/removed from the index, and as things did better or not, I wouldn’t generally be selling stocks to rebalance, I’d be changing my buying habits.

    Shadowhope on
    Civics is not a consumer product that you can ignore because you don’t like the options presented.
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    PhyphorPhyphor Building Planet Busters Tasting FruitRegistered User regular
    edited September 2020
    The primary advantage of an index-tracking ETF is they they can rebalance for free and dont care about individual prices. The S&P TSX 60 index is, obviously, 60 companies. Assuming you don't get free trades, which AFAIK are not a thing up here, that's your trade cost * 120 per year for a yearly rebalancing

    We also don't have fractional share trading so the "unit" of buying an equal amount of each company is going to be based on the highest denominated stock. Currently the highest is 1500/share and there's also a 1200 and 400 in there. Even skipping the two highest that makes $400 * 60 your basic index buyin

    IMO its really inefficient to be paying for small trades. The minimum trade I will consider doing where I am paying a fee is 5k

    Phyphor on
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    MugsleyMugsley DelawareRegistered User regular
    If you feel like you want to diversify more, you can add other ETFs for given sectors or company types (midcap, smallcap growth, energy, medical, tech, etc)

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    y2jake215y2jake215 certified Flat Birther theorist the Last Good Boy onlineRegistered User regular
    I currently have a Roth IRA and an E*TRADE account. I bought a handful of stocks on my E*TRADE account before realizing the usefulness of a Roth, and now I’m wondering. Most of the stock I bought was poorly timed tech, and is at a loss right now - but I plan on likely holding it for a while.

    Does it make sense to sell for a loss and immediately buy in my Roth IRA? From what I can tell, I lose the ability to write off the loss (though I guess I wouldn’t be claiming it anyway) and the ability to withdraw any potential gains, but I also wouldn’t be taxed on any of the gains. I imagine I would also likely pay slightly more than I sell for, unless I happen to accidentally time a dip.

    Am I missing anything? Is there any reason not to do it like this?

    C8Ft8GE.jpg
    maybe i'm streaming terrible dj right now if i am its here
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    y2jake215y2jake215 certified Flat Birther theorist the Last Good Boy onlineRegistered User regular
    (If anyone has any input I’m running out of time with how quickly my Tesla stock is approaching break even haha)

    C8Ft8GE.jpg
    maybe i'm streaming terrible dj right now if i am its here
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    DoodmannDoodmann Registered User regular
    y2jake215 wrote: »
    (If anyone has any input I’m running out of time with how quickly my Tesla stock is approaching break even haha)

    It's a complete wash in the short term and seems more complicated than worth it in the medium term.

    Also get out of Tesla when you're green.

    Whippy wrote: »
    nope nope nope nope abort abort talk about anime
    I like to ART
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    CauldCauld Registered User regular
    Ask e trade if you can simply transfer the stock to your IRA.

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    localh77localh77 Registered User regular
    I don't think so, I think contributions to an IRA have to be in cash, not stock.

    So if it were me, I wouldn't bother realizing a wash loss, just to end up wasting it by contributing to a Roth. I think your best bet is to just keep the stock (or sell it, whichever you prefer), and then start contributing to your Roth going forward.

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    VishNubVishNub Registered User regular
    So I just changed jobs and I'm thinking I need to rejigger my retirement accounts. Also I got married, so that might change things too... though I'm not sure if it does for this particular discussion.

    Last year: I was not-quite maxing my Roth every year, and putting what I was allowed to in my work associated 403b.

    This year: New job offers a 401k, but doesn't match. From what I can tell I can do things like Vanguard 2050 at 0.06% expense ratio, which is actually better than what I have on the Roth (.15%).

    Options, I guess:
    1) max the roth, then 401k up to the cap.
    2) skip the roth, 401k up to the cap.
    3) something else?

    My salary is considerably higher now than last year, so I think it makes sense to switch from primarily post-tax Roth to primarily pre-tax 401k on the assumption that now my retirement income will be lower than my current income (ie. option 1).

    Am I missing something in this analysis?

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    asurasur Registered User regular
    If you believe your tax rate in retirement will be lower than it is now then you should do option 2 with the addition of contributing to the Roth IRA after you hit the 401k cap. You don't say your income, but tax rates are pretty much as low as they've ever been so this assumption may not be valid in which case splitting across pre and post tax is a valid strategy which is probably closer to option 1.

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    SimpsoniaSimpsonia Registered User regular
    Most people's taxes will be lower in retirement than when in their prime earning years unless someone is very early in their career. Remember, Roth contributions are essentially at your top tax rate, and retirement withdrawals are generally at a lower rate than that since you generally aren't spending as much on a fixed income and hopefully have paid off a mortgage, etc.

    Since you've already got an established Roth you can withdraw from both and that keeps your taxable withdrawals at a lower rate as well.

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    HedgethornHedgethorn Associate Professor of Historical Hobby Horses In the Lions' DenRegistered User regular
    Got a quote for a mortgage refinance at 2.375% with no points.

    I know it's not news, but interest rates be crazy.

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    MugsleyMugsley DelawareRegistered User regular
    Since your 401k doesn't match, I recommend option 1.

    Also you should be able to roll the 403b into your new 401k but you'll have to check both institutions.

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    Shazkar ShadowstormShazkar Shadowstorm Registered User regular
    i did mean to look into if i should put some money into my roth 401k (had the option since the other year but didn't)

    probably should at least hedge my bets and do some next year in roth 401k, why not

    poo
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    JragghenJragghen Registered User regular
    So despite everything I had a rate of return of 16.4% last year on my 401k/company retirement contribution plan, which is fucking stupid.

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    KrieghundKrieghund Registered User regular
    Dude, mine was 32%. It has to all be from company stock (my portfolio is 50% that). Though I am very happy with my 11% since inception return. In other news, why do companies make it so much of a pain in the ass to pay off a mortgage? I need a certified check or money order? You've been taking electronic payments since ever and now it's an issue? Fuckers.

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    HefflingHeffling No Pic EverRegistered User regular
    Krieghund wrote: »
    Dude, mine was 32%. It has to all be from company stock (my portfolio is 50% that). Though I am very happy with my 11% since inception return. In other news, why do companies make it so much of a pain in the ass to pay off a mortgage? I need a certified check or money order? You've been taking electronic payments since ever and now it's an issue? Fuckers.

    Because they don't make money when you pay off a loan, so they want you to keep up payments. There's a lot of bad behaviour driven in financial and insurance industries because of this attitude.

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    DarklyreDarklyre Registered User regular
    Jragghen wrote: »
    So despite everything I had a rate of return of 16.4% last year on my 401k/company retirement contribution plan, which is fucking stupid.

    Shit, my 403b was 20.5% and all I did was straight S&P 500. My only "improvement" was to max my contributions early, starting in March to take advantage of the dip, instead of splitting them equally throughout the year.

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    Captain InertiaCaptain Inertia Registered User regular
    edited January 2021
    Heffling wrote: »
    Krieghund wrote: »
    Dude, mine was 32%. It has to all be from company stock (my portfolio is 50% that). Though I am very happy with my 11% since inception return. In other news, why do companies make it so much of a pain in the ass to pay off a mortgage? I need a certified check or money order? You've been taking electronic payments since ever and now it's an issue? Fuckers.

    Because they don't make money when you pay off a loan, so they want you to keep up payments. There's a lot of bad behaviour driven in financial and insurance industries because of this attitude.

    It’s because there’s a whole lot of extra work and paperwork and fees to process a payoff and clear the lien and they don’t want to do all that if there’s a chance the payment needs to be reversed or reapplied or something

    Captain Inertia on
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    JragghenJragghen Registered User regular
    Darklyre wrote: »
    Jragghen wrote: »
    So despite everything I had a rate of return of 16.4% last year on my 401k/company retirement contribution plan, which is fucking stupid.

    Shit, my 403b was 20.5% and all I did was straight S&P 500. My only "improvement" was to max my contributions early, starting in March to take advantage of the dip, instead of splitting them equally throughout the year.

    Yeah, I didn't do anything special - still spread throughout the year (I capped in...November?), but I'm also a bit more spread - about 50% the 500, 25% russel 2500, and the last 25% is split between a large foreign blend (so I'm not entirely in the US), and some bonds.

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    localh77localh77 Registered User regular
    Krieghund wrote: »
    Dude, mine was 32%. It has to all be from company stock (my portfolio is 50% that). Though I am very happy with my 11% since inception return. In other news, why do companies make it so much of a pain in the ass to pay off a mortgage? I need a certified check or money order? You've been taking electronic payments since ever and now it's an issue? Fuckers.

    For what it's worth, I just paid off a mortgage a week or two ago, and I just send a personal check, and it was fine. Although first I made as big an electronic payment as they'd let me, to get the balance way down. And then I got the payoff quote and just send a regular check. All because I didn't want to pay a $30 wire fee at the bank, because of their BS requirement.

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