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I can't imagine trying to buy a house in 1982 at almost 18% interest!

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Originally posted by sasquatch28:
I locked 15yr at 2.5% no points today. No plans to move and at the very least we will save $10k in interest over the life of the loan.

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Originally posted by sasquatch28:
I locked 15yr at 2.5% no points today. No plans to move and at the very least we will save $10k in interest over the life of the loan.

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Originally posted by RogueJSK:

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Originally posted by doublesharp:
First house I bought was in 1978 and my loan was 8 3/4%. Bought my fruit stand property in 1981 owner financed @ 9% and felt like I'd made the deal of the century.

Yeah, it's interesting to look back at mortgage rates for the past 50 years, with the average being around 7-10 percent, but with multiple spikes into the teens in certain years.

http://www.freddiemac.com/pmms/pmms30.html

Really hammers home what an amazing opportunity it is right now, with the lowest mortgage rates in the past few generations.

And I can't imagine trying to buy a house in 1982 at almost 18% interest!

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Originally posted by tatortodd:
Can you share which lender this is with?

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Originally posted by jimmy123x:
Yes, but what they don't tell you is that closing costs are 5% higher (of the entire sale price of the home) over paying cash, which is about a 1% of sales price.

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Originally posted by RogueJSK:

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Originally posted by jimmy123x:
Yes, but what they don't tell you is that closing costs are 5% higher (of the entire sale price of the home) over paying cash, which is about a 1% of sales price.

So? What's that got to do with ridiculously low interest rates?

Would you rather pay 5% closing costs and 18% interest, or 5% closing costs and 2.5% interest?

And realistically, how many people (especialy first time homeowners) can reach into their back pocket and pay cash for a house?

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Originally posted by 1967Goat:
I can't comment for sasquatch, but here's the website for U.S. Bank (my lender).

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Originally posted by RogueJSK:
We're talking about two different things.

You're talking about refinancing. I'm talking about buying.

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Originally posted by tatortodd:

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Originally posted by 1967Goat:
I can't comment for sasquatch, but here's the website for U.S. Bank (my lender).

US Banks' Texas refi rates are higher.

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Originally posted by jimmy123x:

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Originally posted by RogueJSK:

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Originally posted by jimmy123x:
Yes, but what they don't tell you is that closing costs are 5% higher (of the entire sale price of the home) over paying cash, which is about a 1% of sales price.

So? What's that got to do with ridiculously low interest rates?

Would you rather pay 5% closing costs and 18% interest, or 5% closing costs and 2.5% interest?

And realistically, how many people (especialy first time homeowners) can reach into their back pocket and pay cash for a house?

Because a lot of times, someone that's been in a 3.5% mortgage for 4.5 years is better off staying, rather than switching to another 30 year mortgage at 2.5% plus all of the closing costs added in. Putting it out there for the people that keep refinancing every 6-18 months for a better rate, but don't realize what the closing costs are, the extra months of interest they're adding, and think they're moving forward but when you sit down and do the math, actually going backwards. It's real easy to do the math. Multiply the number of existing remaining payments by amount.......then do the same with the new mortgage......

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Originally posted by 280nosler:

For those people refinancing, most banks accept appraisals that are less than 18 months old, and in most instances do not require a survey. In some instances, the closing can be done without a closing attorney for the mortgager. I have done five refinancing in 20 years, and I have never paid more than 1.45%. If you are paying more than 2%, you are doing something wrong, or your amount you are mortgaging is so low that fixed costs would make it untenable.

As for the calculation on how to breakeven, there are a number of calculators out there, but for simplicity, you take the previous mortgage payment less the amounts you are having put into escrow as a baseline. You take the new mortgage rate and rebuild your amortization (balance of house plus any refi costs you plan to roll in), and calculate the payment based on the previous unamortized period.

Example:
You bought a $160,000 house in June 2010 at a rate of 5%. After 10 years, your principal balance is $130,147.30, and you have 20 year left. Current 30 year rates are 3.25% for 30 years, but to calculate the breakeven you base it off the existing duration and add back in any refi costs. Assume they are 1.5%, meaning you would amortize $132,100 (roughly), for 20 years, which gives you $749.26, meaning you save $109.65/ month. I won't go into tax consequences as over 78% of people took standard deductions for TY 2018.

If the cost to refi was $1,952.21, you divide it by the $109.65 to get 17.8, or 17.8 months to breakeven. If you plan to move or sell in less than 18 months, it would be a loosing proposition.

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Originally posted by jimmy123x:

Here in Florida closing costs run 5-6%, it has ZERO to do with credit, the bulk of those expenses are the States doc stamps (tax) and the lenders and sellers title insurance (which the buyer is required to pay in the 3 largest counties), then you have survey cost, appraisal cost, need a wind mitigation report done. On a cash purchase it runs 1% +/- as there are no Doc stamps or lenders title insurance you need to pay.

First off, the first 10 years of any 30 year mortgage your mortgage payment goes to paying almost all of it to the interest and not principle.

I would not consider 71% in the first 10 years of a 5% mortgage to be considered "all"

That is not how you calculate whether or not it's better to refinance. You take the sum of all of the remaining payments of your current mortgage. Then all of the costs and all of the payments of the new mortgage and get a total. Whichever total sum of all payments is cheaper, would determine whether it's better to refinance or not. Refinancing a mortgage with 20 years left, with a 30 year mortgage is almost always going in the wrong direction and you'll never be free and clear of mortgage payments or own the house outright. It's a different story if you have 20 years left and go to a 15 year mortgage or 20 year mortgage, but the majority of people don't do that.

I never said that - I said breakeven. What you are saying needs to take NPV into consideration.

Paying an extra payment a year on an existing mortgage also greatly lowers your effective interest rate as the interest on a fixed mortgage is calculated (amortization table) based upon paying all 180 or 360 payments, when you pay more, it undercuts the principle and effectively lowers the effective interest rate and greatly shortens the mortgage.

Paying your mortgage every 2 weeks also reduces interest cost, but neither LOWERS YOUR EFFECTIVE APR, it changes the terms.

If you've refinanced 5 times in the last 20 years, YOU are doing something wrong. The last property I bought with a mortgage was Dec 2005, I paid the mortgage off 2 years ago. I also bought 2 sizeable properties, one December 2009 and one in November 2013 and paid cash for both of them. It's REALLY easy to get ahead when you're not surrounded with debt you're carrying. Problem is, everyone wants to live the high life, and not sacrifice a little for 5 years to knock all of their debt out, or lower it significantly so all of their income goes to paying debt payments (mortgage, car, credit cards, equity line, etc. etc.).

Three houses in 20 years. Refinanced in 2000 to 5.25%, refinanced in 2002 to 4.375%, Sold in 2006 to buy bigger house at 5.25%, refinanced in 2008 before the market fell out at 4.25%, then refinanced again in 2010 using the HARP program to a 2.75%-15 year loan. Sold in November 2018 and bought anew at 5%, refinanced in May 2019 at 4.125%. IF I could score a 2.635% for 15 years, my payment would go up by less than $300, and I'd probably do it, but the lenders around here have 3/8 of the point different between origination and refi mortgages because they are so busy. Not sure the value of the house you paid off in 15 years, but good for you. I had 4 years left on our last house before we moved, but didn't see staying there as a choice. Paying off a $140K mortgage is a little easier than paying off a $400K mortgage, and some people only make so much.

But, we're getting severely off topic here, so that's all I have to say.

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Originally posted by tatortodd:

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Originally posted by sasquatch28:
I locked 15yr at 2.5% no points today. No plans to move and at the very least we will save $10k in interest over the life of the loan.

Can you share which lender this is with?

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Originally posted by jimmy123x:
Because a lot of times, someone that's been in a 3.5% mortgage for 4.5 years is better off staying, rather than switching to another 30 year mortgage at 2.5% plus all of the closing costs added in. Putting it out there for the people that keep refinancing every 6-18 months for a better rate, but don't realize what the closing costs are, the extra months of interest they're adding, and think they're moving forward but when you sit down and do the math, actually going backwards. It's real easy to do the math. Multiply the number of existing remaining payments by amount.......then do the same with the new mortgage......