Home Improvement Thread

[DigitalGypsy66]

We've had our current mortgage for almost 9 years (out of 30). We're at a little over 4% - would it make sense to look into a refi? Thing is, I'm not sure how long we want to stay in our current locale.

[NTP66]

We've had our current mortgage for almost 9 years (out of 30). We're at a little over 4% - would it make sense to look into a refi? Thing is, I'm not sure how long we want to stay in our current locale.

You probably want to figure out how long you intend to stay at your current residence. If it's over 2 years, personally, I'd pull the trigger. Your current mortgage won't matter if you go to sell the house, so being able to save money every month until that happens is a good thing. I refinanced in both 2015 and 2017, and both times my fees came to under $500 in total. I would never pay the $4k+ in fees that I see attached to some refinance loans.

[CBear3]

HOA’s suck donkey balls.
That is all

[NTP66]

I replaced the whining motor in my dishwasher this afternoon. Talk about a stupid easy job to complete.

[Ted]

We've had our current mortgage for almost 9 years (out of 30). We're at a little over 4% - would it make sense to look into a refi? Thing is, I'm not sure how long we want to stay in our current locale.

As a math problem, I assume you had a $300K loan at 4.25% and have made 90 payments of principal and interest only (no additional toward principal). Your monthly principal and interest is $2,538.32:

At that point you have paid $89,103.33.in interest. Your remaining balance is $256,279.58. If you continue paying principal and interest only, you will pay an additional $142,191.78 in interest.

Now, refi assumption: No closing costs, 3.5% on the $256,279.58 for 30 years. If you pay only principal and interest monthly, you will incur $158,011.91 in interest. Your payment (principal and interest) is $1,898.29 monthly.

Is saving $640/month worth an additional $15,820.13 in interest? Are you going to put that $640/month somewhere it is getting you more than 3.5%? Are you comfortably making the current payments? Given the assumptions I have made, I'd argue it's a waste of time (and money).

[shmenguin]

Siding, roof and fence all getting done this fall. none of them will be enjoyable or improve my life in a tangible way when finished.

Guess I’m officially never moving again.

[Willie Kool]

Another window (and the electric meter) done...

[mac5155]

Looks beautiful.

I wish I had the patience for an old house. They're so spectacular.

[meow]

*unzips*

[mac5155]

I want to start framing in my basement, at least put up one wall so that I can keep my cat and dogs out of an area where we store things - baby clothes, Christmas decor, etc.

Is this a relatively simple process? Frame it in (would build a wall perpendicular to the foundation only touching it at the beginning and end), hang a door, and then drywall one side?

[DigitalGypsy66]

We've had our current mortgage for almost 9 years (out of 30). We're at a little over 4% - would it make sense to look into a refi? Thing is, I'm not sure how long we want to stay in our current locale.

As a math problem, I assume you had a $300K loan at 4.25% and have made 90 payments of principal and interest only (no additional toward principal). Your monthly principal and interest is $2,538.32:

At that point you have paid $89,103.33.in interest. Your remaining balance is $256,279.58. If you continue paying principal and interest only, you will pay an additional $142,191.78 in interest.

Now, refi assumption: No closing costs, 3.5% on the $256,279.58 for 30 years. If you pay only principal and interest monthly, you will incur $158,011.91 in interest. Your payment (principal and interest) is $1,898.29 monthly.

Is saving $640/month worth an additional $15,820.13 in interest? Are you going to put that $640/month somewhere it is getting you more than 3.5%? Are you comfortably making the current payments? Given the assumptions I have made, I'd argue it's a waste of time (and money).

Yeah, not worth the hassle. Thanks for the weekend number crunching!

[mac5155]

Now what if you refi down to a 15 or 20 year mortgage tho?

[NTP66]

That was the assumption. Refinancing to the same term almost never makes sense. I’m on a 20-year loan and was looking to go to a 15, but rates climbed right back up, so I’ll live with my 3.125% mortgage.

[Ted]

Now what if you refi down to a 15 or 20 year mortgage tho?

First, I fudged DGs data. I have columns with P&I, P, and I. I accidentally summed P&I +I.

$300K @ 4.25 for 30 years is $1,475.82
$256,279.58 @ 3.5 for 30 years is $1,150.81.

The refi in that example saves $365.01 per month. The rest was still valid. It would cost an extra $15,820.13 in interest.

It's difficult to answer the question as you posed it as there are other variables. Particularly, how far into the loan are you? Using the same example, somebody 5 years into the $300K @4.25% has paid $59,909.77 in interest and has balance of $272,423.13. There is still $170,322.84 in interest to be paid on the balance of the 30 years. If you refinance the $272,423.13 @ 3.5% over 20 years, you will only pay $106,763.48 in interest. The monthly payment jumps to $1579.94 from $1,475.82.

Same example 10 years into the original mortgage. $115,428.07 in interest has been paid and $115,867.04 remains. The balance on the loan is $238,329.73. Refi to 3.5% and you pay $93,402.22.

Servicing interest experiences diminishing returns the further into loan you are. I just bought a new house and have made two payments. I made significant additional principal payments each month. The two that I have made have already saved me $23K over the life of the loan. If I had waited until five years into the loan to make the same two payments, they would have saved me only $17K.

I would have taken out a 7/1 ARM had the rate spread been larger at the time. I think it was like 4.00% vs 4.25% for 30 year fixed.

My opinion is that the common acceptance that taking out a 30 year loan and making only the monthly P&I is one of the biggest psychological con jobs in this country. My general advice without knowing all of the financial circumstances of a household (I'm not a financial consultant, I just look at this stuff a lot in my free time) is to take out the shortest term loan you can currently comfortably afford (risk-mitigation) and effectively control the interest rate by plowing as much additional principal payments as you possibly can. The real dream isn't owning a home with a note on it. It's actually owning the home (other than tithing the government in perpetuity through property tax....but that's for the political discussion).

[DigitalGypsy66]

Why do you have to tell a bank/lender that you are making a principal payment? A couple of years ago, my wife received a bonus and made an extra payment on our mortgage. (Our bank is also our mortgage lender, so we applied an extra electronic payment). We were up to date on payments, and it was just added as an extra payment instead of a principal payment. So we’re technically a month ahead on our mortgage.

We assumed it was like a regular car loan, where any payments above what is owed is put towards principal.

[grunthy]

Why do you have to tell a bank/lender that you are making a principal payment? A couple of years ago, my wife received a bonus and made an extra payment on our mortgage. (Our bank is also our mortgage lender, so we applied an extra electronic payment). We were up to date on payments, and it was just added as an extra payment instead of a principal payment. So we’re technically a month ahead on our mortgage.

We assumed it was like a regular car loan, where any payments above what is owed is put towards principal.

We just put an extra 200 each month right now. We are looking to refinance to a 15 year loan. We would only be paying about 200 dollars more a month than we are right now.

[NTP66]

Why do you have to tell a bank/lender that you are making a principal payment? A couple of years ago, my wife received a bonus and made an extra payment on our mortgage. (Our bank is also our mortgage lender, so we applied an extra electronic payment). We were up to date on payments, and it was just added as an extra payment instead of a principal payment. So we’re technically a month ahead on our mortgage.

We assumed it was like a regular car loan, where any payments above what is owed is put towards principal.

Is this a rhetorical question? Every loan servicer I've dealt with thus far has actually required you to choose the 'extra principal' option when paying your monthly bill, otherwise they assume it's a standard payment.

[mac5155]

Now what if you refi down to a 15 or 20 year mortgage tho?

First, I fudged DGs data. I have columns with P&I, P, and I. I accidentally summed P&I +I.

$300K @ 4.25 for 30 years is $1,475.82
$256,279.58 @ 3.5 for 30 years is $1,150.81.

The refi in that example saves $365.01 per month. The rest was still valid. It would cost an extra $15,820.13 in interest.

It's difficult to answer the question as you posed it as there are other variables. Particularly, how far into the loan are you? Using the same example, somebody 5 years into the $300K @4.25% has paid $59,909.77 in interest and has balance of $272,423.13. There is still $170,322.84 in interest to be paid on the balance of the 30 years. If you refinance the $272,423.13 @ 3.5% over 20 years, you will only pay $106,763.48 in interest. The monthly payment jumps to $1579.94 from $1,475.82.

Same example 10 years into the original mortgage. $115,428.07 in interest has been paid and $115,867.04 remains. The balance on the loan is $238,329.73. Refi to 3.5% and you pay $93,402.22.

Servicing interest experiences diminishing returns the further into loan you are. I just bought a new house and have made two payments. I made significant additional principal payments each month. The two that I have made have already saved me $23K over the life of the loan. If I had waited until five years into the loan to make the same two payments, they would have saved me only $17K.

I would have taken out a 7/1 ARM had the rate spread been larger at the time. I think it was like 4.00% vs 4.25% for 30 year fixed.

My opinion is that the common acceptance that taking out a 30 year loan and making only the monthly P&I is one of the biggest psychological con jobs in this country. My general advice without knowing all of the financial circumstances of a household (I'm not a financial consultant, I just look at this stuff a lot in my free time) is to take out the shortest term loan you can currently comfortably afford (risk-mitigation) and effectively control the interest rate by plowing as much additional principal payments as you possibly can. The real dream isn't owning a home with a note on it. It's actually owning the home (other than tithing the government in perpetuity through property tax....but that's for the political discussion).

Thanks. The reason I ask is I'm (only) about 17 months into a 15/1 ARM at an even 4%. I think my original balance was $266k. It was a construction loan, the product allowed me to completely avoid PMI and the interest rate was lower than with a 30 year fixed (with PMI or 20% down). So I always have my eye on refi options, even though I have 13.5 more years until crunch time.

[Willie Kool]

Bought our place in Dec 1999. We refinanced twice years ago, and are now down to less than a year left. Ended up taking 9+ years off the term at less than $100 more per month.

[NTP66]

Bought our place in Dec 1999. We refinanced twice years ago, and are now down to less than a year left. Ended up taking 9+ years off the term at less than $100 more per month. Currently owe slightly more on the Buick than we do on the house...

We refinanced twice in back to back years a few years ago. We put about $500/month extra towards principal, and last I checked, it’ll wind up cutting 8-9 years off our 20-year loan.

[Ted]

Thanks. The reason I ask is I'm (only) about 17 months into a 15/1 ARM at an even 4%. I think my original balance was $266k. It was a construction loan, the product allowed me to completely avoid PMI and the interest rate was lower than with a 30 year fixed (with PMI or 20% down). So I always have my eye on refi options, even though I have 13.5 more years until crunch time.

$794.63 additional per month toward principal in payments 18-180 will pay it off at 15 years (for what it's worth). Wells currently shows 20 year fixed at 3.75%. That would increase the payment by $260/month. You'd get there in 20 years just the same on your current loan (assuming at end of 15 years your rate stays at 4%) by paying an extra $379.98/month on your current loan. And with that you aren't forced to pay that extra if some unforeseen circumstance happens. And the refi again assumes you are paying no closing costs. I think 1/4 point - 1/2 point swings are really splitting hairs.

[NTP66]

The screws holding the float to my sump pump completely rusted off while I was flushing the water heater, so I had to buy a universal float since the pump still seems to work well. Then my furnace stopped heating, and it turns out the fuel valve is toast. Nobody carries propane anything, so my BIL won’t be able to get it until mid-week. Fun times.

[tjand72]

At least it's the beginning of October and not January.

[NTP66]

Yep, I’m quite thankful for that, for sure.

[Viva la Ben]

Switched aht my furnace filter and flipped the switch today after coming home to a 61°F house.