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Post by Deleted on Jun 14, 2020 17:23:26 GMT -5
No, this is not another Covid or collapsing society thread! So, the dreaded time has come. July will be my last child support payment for DS. I have been using that money to make most of my house payment for the past 15 years and the only "fluff" in my budget is the $100/month to his 529 (which I will be stopping) and retirement savings. Unfortunately, I can't just slash the retirement right now because we're sitting right on the edge of a financial aid cliff for DS, so I'd rather just keep on going as is for now and use savings or loans or something to cover the house payment temporarily. 17 months gets me to covering 4 years of college, 29 months, 5 years (although the vast majority of his aid is limited to 4 years anyhow, so I might seriously give up on that 29 month goal). After that point, I WILL slash retirement savings. Possibly down to just the company match of 4% (assuming the match is reinstated after this covid cutback), this will free up quite a bit. There's also the possibility of just taking Roth contributions after that point and paying the house off. So, I have obviously been planning for this for awhile. My original plan was to save as much as I could and use the savings to take me another 3 years. I was doing pretty good for awhile and have $12,600 stashed away in my "survival fund", but last year was a cluster and I've been digging out of that hole and not saving. Soooo, I could take that $12,600 and make it 14 months @ $900/month withdrawal which gets me almost to the 17 month goal. The part that worries me with my plan is that nothing can go wrong. I can't lose my job or (much more likely), Carrot's dad can't lose HIS job, so I've been bouncing around a couple other ideas. #1 Refinance. I owe about 95K now and my payment is $1300 with a little under 7 years left. My CU is advertising some Rapid Refi 10 year loan at 2.99% (I currently am paying 3% on a 15), if I paid a little more down and kept the new loan to 90K that will cut about $400/month from my payment and add a few years to the term. Not a big savings and I doubt I could get away without some hefty closing costs just due to how are state is, but I haven't talked to anyone there about what this "Rapid Refi" really means. The other option is a 30 year which would cut it about $900/month but have me paying FOREVER and the interest tacked on is something like 50K. #2 Loan. I have a 30K HELOC I could draw on. Part of me really wants to just pull 20K or so, stick it in checking, and live in all the happy denial for the next 29 months. I would still owe 10K less at the end than I do now. #3 Burn the house, collect the insurance, and build a smaller place on the same site (with no basement!) Opinions?
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jelloshots4all
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Post by jelloshots4all on Jun 14, 2020 18:01:31 GMT -5
Do you have a taxable account you could pull the $20K from? Borrow from yourself without tax implications? Otherwise I would choose #1
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Post by Deleted on Jun 14, 2020 18:32:42 GMT -5
I would choose #1 and the 30-year option at that. You can pay whatever you want. Several years ago I refinanced my house to a 20-year loan, but I've been paying like it is a 15-year loan. The 30-year option gives you choices, particularly if you happen to lose your job. And this is coming from ME, Queen of trying to pay your mortgage off by throwing extra $$$ at it. Good luck.
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swamp
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Post by swamp on Jun 14, 2020 18:35:48 GMT -5
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CCL
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Post by CCL on Jun 14, 2020 18:44:37 GMT -5
How much will you be losing each month?
I know you've considered a smaller house in town. What about a smaller house but on a few acres? Anything available like that for (a lot) less money?
Since you've already got the HELOC, I'd look into the refinance, but depending on the cost, you might be better off using the HELOC, if you ever need more cash.
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Post by Deleted on Jun 14, 2020 18:54:17 GMT -5
Do you have a taxable account you could pull the $20K from? Borrow from yourself without tax implications? Otherwise I would choose #1 A very small account...like 7K. I didn't think I could touch it because it would mess up financial aid too (can only have very specific schedule 1 items), but apparently not. I might be able to pull that, but capital gains would get added to AGI so have to be careful there.
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Post by Deleted on Jun 14, 2020 19:01:53 GMT -5
How much will you be losing each month? I know you've considered a smaller house in town. What about a smaller house but on a few acres? Anything available like that for (a lot) less money? Since you've already got the HELOC, I'd look into the refinance, but depending on the cost, you might be better off using the HELOC, if you ever need more cash. $1000. About 1/3 present take home. Moving just isn't something that is going to happen for me very quickly even if I decided I wanted to do that. I just have too much shit. The place is a mess, work needs to be done, I'd have to rehome animals, board my horse...and I have zero motivation for all that right now.
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Post by Deleted on Jun 14, 2020 19:04:08 GMT -5
I was going to put "Get back together with Ex 2.0" but I figured too many would think I was serious.
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Post by Deleted on Jun 14, 2020 19:45:21 GMT -5
Years ago when we still lived in the UP, our mortgage was with Wells Fargo. They offered a Rapid Refi...no appraisal, no closing, big drop in interest rate as long as they could debit our checking account for the payment each month. Took about a week. Otherwise, #3
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busymom
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Post by busymom on Jun 14, 2020 19:54:28 GMT -5
I'm going to throw out a different option. Tell your kiddo that you love him, BUT, he's going to have to pay more of his college than you'd anticipated. Unless, of course, he wants you live live with HIM once you retire, because you spent your potential retirement money on his education.
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Lizard Queen
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Post by Lizard Queen on Jun 14, 2020 19:57:33 GMT -5
I'm with Susan. Refi to a 30, or a 15 if you just can't stand the thought of 30 years.
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giramomma
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Post by giramomma on Jun 14, 2020 19:59:12 GMT -5
I would also refi to a 30 year. I don't know what rates are now. We refi'ed for a 30 year similar sized loan, and our mortgage payment is $900, 500 of that is taxes and $400 is the actual mortgage.
I'm presuming that you won't have the taxes we do. The wildcard I'm thinking about is transportation. You've done well to eek it out so far, but I'm assuming you are going to need a newer vehicle at some point.
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oped
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Post by oped on Jun 14, 2020 20:02:26 GMT -5
Refi 30. Most flexible. Can always pay faster, can’t reset lower.
How many acres do you own? Could you sell some?
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Post by The Walk of the Penguin Mich on Jun 14, 2020 20:08:09 GMT -5
What happens if you refinance your house to a 30 year mortgage AND drop your retirement contributions to get the match only? How close do those 2 come to getting rid of the shortfall?
If you consider getting back with Ex. 2.0, I’ll come to MN and kick your ass! (you’re safe, I can’t move my leg that high, but I can kick your shin!).
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Post by Deleted on Jun 14, 2020 20:22:43 GMT -5
I'll look into the Rapid Refi more. If it really doesn't have closing costs maybe. It's a 10 year at 3%, but it says there is a 15 year option for 3.25 and 20 year for 3.5% with a balloon payment due at 10 years. That's probably bad... I'm SO CLOSE to having this damn thing paid off. The balance is dropping more than $1000/month now.
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Post by Deleted on Jun 14, 2020 20:26:00 GMT -5
What happens if you refinance your house to a 30 year mortgage AND drop your retirement contributions to get the match only? How close do those 2 come to getting rid of the shortfall? A 30 year refinance would drop my payment to about $400/month. A $900/month drop.
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Post by Deleted on Jun 14, 2020 20:31:43 GMT -5
I'm going to throw out a different option. Tell your kiddo that you love him, BUT, he's going to have to pay more of his college than you'd anticipated. Unless, of course, he wants you live live with HIM once you retire, because you spent your potential retirement money on his education. Except I'm NOT spending my retirement money on his college. I'm putting way more in so I keep below the Auto Zero EFC threshold. It literally is this weird situation where if I stopped putting 10K in my 401K he'd get 10K less in grants...actually if I put just a few thousand less in my 401K he'd get 10K less in grants.
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jelloshots4all
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Post by jelloshots4all on Jun 14, 2020 20:33:01 GMT -5
What happens if you refinance your house to a 30 year mortgage AND drop your retirement contributions to get the match only? How close do those 2 come to getting rid of the shortfall? A 30 year refinance would drop my payment to about $400/month. A $900/month drop. I would do that and overpay the mortgage as much as you can every month. That's what I do.
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CCL
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Post by CCL on Jun 14, 2020 20:42:27 GMT -5
If there are little to no closing costs, then the refi makes the most sense. What about a 20 or 25 year loan? That might be a good compromise. Or go with the 30 then add enough to bring the loan down $700 a month or so.
Years ago, I had to quit working to stay home with my kid. The only way we could make it work was to refi the house. It set us back 6 or 8 years, but in the long run it didn't make a bit of difference. After a few years were able to save more in the 401k and hubby even retired early.
Time goes by and you are still paying it down, not borrowing more than you already owe, so the principal is still decreasing every month.
It will still work out just fine.
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CCL
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Post by CCL on Jun 14, 2020 20:44:56 GMT -5
Another thing, with the older kid away at school, you'll probably save some $$$ on groceries and utilities.
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Post by Deleted on Jun 14, 2020 21:36:51 GMT -5
Another thing, with the older kid away at school, you'll probably save some $$$ on groceries and utilities. Groceries for sure. Utilities I don't know. He takes looooong showers, but we don't pay for water and the water heater is LP. I'm also going to get a deal on car insurance once he's gone and I'm probably going to the other van and just have his car as my spare.
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Post by Deleted on Jun 14, 2020 21:50:17 GMT -5
I would also refi to a 30 year. I don't know what rates are now. We refi'ed for a 30 year similar sized loan, and our mortgage payment is $900, 500 of that is taxes and $400 is the actual mortgage.
I'm presuming that you won't have the taxes we do. The wildcard I'm thinking about is transportation. You've done well to eek it out so far, but I'm assuming you are going to need a newer vehicle at some point.
I think my newer van can easily go another 2-3 years, but I do still have an emergency fund in addition to the money I set aside specifically to extend child support. I would never plan to spend the EF down, but if the van dies I can get something. I'm more worried about the furnace, CA and water heater all going at once than that though.
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Post by Deleted on Jun 14, 2020 21:57:20 GMT -5
I knew you all would be pushing the 30 year loan. A $400/month payment would be nice, but I'm sooooo close to paying this thing off.
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raeoflyte
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Post by raeoflyte on Jun 14, 2020 22:10:24 GMT -5
I'd do the 30 year, save the difference, and then pay it towards the mortgage after 4 years and you know you don't need it.
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raeoflyte
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Post by raeoflyte on Jun 14, 2020 22:13:53 GMT -5
I knew you all would be pushing the 30 year loan. A $400/month payment would be nice, but I'm sooooo close to paying this thing off. If things go perfectly how behind does the 30 year put you? I feel like it frees up all of the stress and leaves your options open if shit hits the fan and everything needs to be replaced at once.
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Post by Deleted on Jun 14, 2020 22:29:47 GMT -5
I knew you all would be pushing the 30 year loan. A $400/month payment would be nice, but I'm sooooo close to paying this thing off. If things go perfectly how behind does the 30 year put you? I feel like it frees up all of the stress and leaves your options open if shit hits the fan and everything needs to be replaced at once. Without prepaying? I don't know what the 30 year rates are, but assuming it is exactly the same as what I'm paying and there are zero closing costs (that won't happen). This is where I'd be with my mortgage balance January of 2023 (the 29 month mark) Current loan - $60,912 (could pay off with Roth contributions which are a little over 63K) 30 year loan - $89,154
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NastyWoman
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Post by NastyWoman on Jun 14, 2020 22:46:16 GMT -5
What happens if you refinance your house to a 30 year mortgage AND drop your retirement contributions to get the match only? How close do those 2 come to getting rid of the shortfall? A 30 year refinance would drop my payment to about $400/month. A $900/month drop. So in other words this refi would cover the entire deficit createdby ending the $1,000 inchild support since you saved $100 of that anyway. I would do that asap, while you still have your job for sure, get through the 17 months needed to maintain DS1s grants and then start paying of that mortgage as fast as I could. There is no reason a 30 year loan has to take 30 years to pay off (paid mine off in less than 11years). The added advantage of this approach is that it will help you should anything go wrong with your job.
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giramomma
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Post by giramomma on Jun 14, 2020 22:56:47 GMT -5
I knew you all would be pushing the 30 year loan. A $400/month payment would be nice, but I'm sooooo close to paying this thing off. Right. But sometime, it's better to use debt as a tool. We could pay off our mortgage right now, too. Actually, taking it a step further, we could have always paid for every home with cash and been debt free. But that would mean taking 200K out of the stock market. Which would be a dumbass move.
And the lower payment would also help incase the bigger ticket items like the furnace craps out on a person.
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Post by Deleted on Jun 14, 2020 23:30:51 GMT -5
But, NO house payment seems even more freeing. I'm so sick of paying a mortgage.
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cronewitch
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Post by cronewitch on Jun 15, 2020 2:12:10 GMT -5
I vote for a mix of using some HELOC say $400 a month not borrow ahead just monthly draw and make up the rest with reduced cost like food and car insurance. A side hustle if a few dollars short like boarding another horse or selling eggs or put kids to work or you second job. DS1 can work summers and part time. Sell excess stuff for cash. This may not be that much short.
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