GRG a/k/a goldenrulegirl
Senior Associate
"How you win matters." Ender, Ender's Game
Joined: Jan 2, 2011 13:33:09 GMT -5
Posts: 11,291
|
Post by GRG a/k/a goldenrulegirl on Jun 15, 2020 11:29:16 GMT -5
Will you be able to refinance (based on your income after childsupport ends)?? Mortgage lenders are weird about income to debt ratios and the stability of income and all sorts of other stuff. Hadn't really thought about that, but they did borrow me 208K in 2009 and 184K in 2012. I would think 90K or so wouldn't cause them to bat an eye even with 12K less income. It's probably not even that much less because I'm making more than I was then. I'm mostly concerned about closing costs on a 30 year since its not part of the Rapid Refi deal. They are typically high in MN due to all this stupid title crap that costs a fortune. I think usually over 2K to do it if it needs appraisal too. Couple random thoughts: 1. Someone else here posted recently about not being able to refinance a similar amount because the balance/loan amount wasn’t worth the bank’s trouble. So, check with your lender before you spend much more time thinking over this option. 2. I’m assuming the child support was listed in the FAFSA. But you used income from 2 years ago and things have now changed. If you included child support in the FAFSA, then your son should contact financial aid and explain the significant change in your household income and ask for more $$$ 3. If you refinance, you will presumably be paying less interest. Will that impact your Federal and/or state tax returns? 4. Your son is not taking his car to college? If not this year, what about next year? What if they close the campus and send the students home again and he starts using the car again? You’ll need to account for those costs if he does take it at some point. Personally, life is all wonky now and the future isn’t nearly as clear and straightforward in any aspect of life anymore. IF things play out well, I’d refinance for 30 years, get through the college years, and then fast track the pay-off after you come ou the other side.
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Jun 15, 2020 11:37:31 GMT -5
My original mortgage was for $95k. We refinanced at about $80-85 for a better interest rate. I'm not sure why you wouldn't be able to refinance $95k, but you may not get the best interest rate they offer. Our refi couldn't get the best interest rate, but it was still better.
|
|
jelloshots4all
Senior Member
Joined: Aug 14, 2013 15:54:13 GMT -5
Posts: 4,642
|
Post by jelloshots4all on Jun 15, 2020 12:02:33 GMT -5
I would think FAFSA would have zero impact even if you child support stopped. Then it would be from your exes income, so a wash on the total dollars.
How would a refinance impact FAFSA? You still owe the same amount you are merely choosing different payment terms.
Again, I would opt for the refi to a 30 yr, and pay it off as quickly as you figure out your new "normal" income and budget (which I know you already do a great job in regards to budgeting)
|
|
pulmonarymd
Junior Associate
Joined: Feb 12, 2020 17:40:54 GMT -5
Posts: 7,365
|
Post by pulmonarymd on Jun 15, 2020 12:06:10 GMT -5
I want to echo others here. I think refi for 30 years is the way to go, for a number of reasons
1 After doing this 3 times, college costs are always more than you think, and frequently in ways financial aid will not account for 2 you are a single earner household. If the shit hits the fan, your taxable account and Roth give you a good cushion 3 You can always pay more, even now, and significantly shorten the term, but have flexibility for emergencies 4 If the market does well, you can always retire early if you stay invested, and a $400 mortage is easily doable
|
|
phil5185
Junior Associate
Joined: Dec 26, 2010 15:45:49 GMT -5
Posts: 6,409
|
Post by phil5185 on Jun 15, 2020 12:14:51 GMT -5
Two mysteries of our society - (1) a compelling desire to prepay mortgages, and (2) the desire to prepay income taxes.
A US home mortgage is one of the best sources of capital in the World, you can get a 30-year, fixed rate loan for about 3%. The loan is locked, it cannot be called early, the rate/terms cannot be changed by the lender, and you are free to refi if you want to - ie, the borrower is is in a no-risk position. I would never spend my available capital on prepaying a 3%, 30-year loan, almost anything is a better deal than As for having a mortgage while retired - I refinanced a house about 12 years after I retired, got a 30-year mortgage.
Consider: say that you have the near-term means to raise $95k to prepay your loan - or you could keep the loan and invest the $95k. A $95k lump sum, placed in an 11% index fund for 30 years, is $2,175,000. A nice chunk to own at age 81 (or nice for your heirs). My approach would be to pay the fees ($2000 or whatever), and finance the total property for 30 years, fixed rate. Pay off any short-term, high rate loans, and invest the proceeds elsewhere. I like the lay of your 15 ac - ie, 350 ft frontage, 2000 ft deep. Any hills and creeks?
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 12:41:05 GMT -5
2. I’m assuming the child support was listed in the FAFSA. But you used income from 2 years ago and things have now changed. If you included child support in the FAFSA, then your son should contact financial aid and explain the significant change in your household income and ask for more $$$ It's actually not. Part of this Auto-Zero cliff. If you're at less than 26K AGI (like question 3 on the FAFSA) all the subsequent questions are bipassed and the FAFSA is over. You don't include child support (which includes child support from his younger brother) or add back in retirement contributions. It's why it makes such a huge difference for us. Most people with 26K AGI aren't getting 22K in child support. There's another cliff at 50K AGI where all assets are ignored.
Unfortunately, I'd be paying more in interest with a refinance going from a 15 to a 30 year. Quite a bit more. But, I haven't paid enough interest to itemize for many years. I think I paid about $2500 in mortgage interest last year.
No. It's in Minneapolis. Parking is very inconvenient and very expensive. I think $600/semester and that's if you can get a spot, as it's by a lottery every semester. For $114/semester he can get a student pass that will get him on all the buses and light rail for free which would take him anywhere in the Twin Cities metro area. Getting back and forth from home is easy. It's a 2 hour drive that we make a lot and he has grandparents and aunts and uncles up there that come down a lot too.
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 12:45:37 GMT -5
Two mysteries of our society - (1) a compelling desire to prepay mortgages, and (2) the desire to prepay income taxes.
A US home mortgage is one of the best sources of capital in the World, you can get a 30-year, fixed rate loan for about 3%. The loan is locked, it cannot be called early, the rate/terms cannot be changed by the lender, and you are free to refi if you want to - ie, the borrower is is in a no-risk position. I would never spend my available capital on prepaying a 3%, 30-year loan, almost anything is a better deal than As for having a mortgage while retired - I refinanced a house about 12 years after I retired, got a 30-year mortgage.
Consider: say that you have the near-term means to raise $95k to prepay your loan - or you could keep the loan and invest the $95k. A $95k lump sum, placed in an 11% index fund for 30 years, is $2,175,000. A nice chunk to own at age 81 (or nice for your heirs). My approach would be to pay the fees ($2000 or whatever), and finance the total property for 30 years, fixed rate. Pay off any short-term, high rate loans, and invest the proceeds elsewhere. I like the lay of your 15 ac - ie, 350 ft frontage, 2000 ft deep. Any hills and creeks?
I think what keeps getting forgotten here is that without child support I take home about 2K/month, have one kid headed to college and another headed into private school. It's not like I can finance a 300K property. If I was married making 150K/year, life would be different, but I need to reduce monthly expenses, not increase them.
And you refinanced a rental! Your house is paid for!
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 13:02:16 GMT -5
I like the lay of your 15 ac - ie, 350 ft frontage, 2000 ft deep. Any hills and creeks?
I live on top of a hill. The back overlooks a river valley.
|
|
steph08
Junior Associate
Joined: Jan 3, 2011 13:06:01 GMT -5
Posts: 5,450
|
Post by steph08 on Jun 15, 2020 13:06:03 GMT -5
I think you should refinance to a 30 year mortgage.
That will basically offset your loss of child support.
Keep the $12k in savings.
Your additional interest shouldn't be more than $3k or so if you only pay the 30-year payment for a few years.
Or - take out a 30-year mortgage and add extra to the principal.
It won't be as much as you pay off monthly now, but it will extend how long your savings will last while allowing you to feel that you are still making progress on paying off the house.
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 13:07:26 GMT -5
I would think FAFSA would have zero impact even if you child support stopped. Then it would be from your exes income, so a wash on the total dollars.
How would a refinance impact FAFSA? You still owe the same amount you are merely choosing different payment terms. I'm not understanding the first line. But, for the rest. Debt and payments aren't considered in financial aid. It's strictly income and assets (for FAFSA only schools anyhow, some private schools use the CSS profile which is more in depth)
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Jun 15, 2020 13:27:33 GMT -5
And frankly more than capable of making a 400 payment in retirement IF it came to that. How would the new 30 year mortgage compare with your other bills? $380 - All insurance (3 autos, home, 2 life and umbrella) $225 - Property taxes (although I usually get almost half that back) $300 - LP, electric, garbage, 3 phones and TV. so this is 905 - current mortgage is about 1300? so about 2200 month bills vs 2000 take home pay.? before food, clothes, other expenses are added in? going to the 30 year/400 payment. You have 1300 in fixedish expenses, and then 700 for food, etc. And you have a lot of animals to tend/feed/vet as well. X1 was willing to help for a longer period of time. Why not take him up on it?
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Jun 15, 2020 13:35:10 GMT -5
That's one of my options at 29 months. I can't now because I owe 95K and only have 63K in Roth contributions. oh - I misunderstood then. You've boxed yourself into a corner, with the mandatory high 401k contributions for the grants, and not wanting to do a 30 year mortgage. In this scenario - getting a second job wouldn't really help because of the grants. So - how close to the bone is a budget based on not refinancing? And can you live on that for 7 years? The other extreme is to refinance and take money out - could invest that difference and hopefully in 7-10 years - that extra would grow to pay off the mortgage! That could be a fun game - if you win . The other is the take the 63k roths contributions NOW, pay on the mortgage, then you have 22k? left? That could be paid off more quickly than the 29 months as so much less interest would accrue - maybe 18 months? if you could scrap extra money to put towards that? That is at least a short enough period of time to really cut the budget to the bone to make it. That would be paid off much more quickly than the other way round. Would that money earn more in the roth account than it saves you? Really depends on the market. I wouldn't want to bet on the market being normal in the next few years however, but there is no timing that beast. At this point - you have to give up something - what is going to hurt the least? And/or what financial milestone is most important to you? Which scenario is going to give you the most 'head space' out of financial consideration? Let you sleep like a baby? ok - here is the most radical plan yet! Use the roth to pay down mortgage, ask X1 if he can float you an additional 18 months of child support - combine that with the 400 that the 30 year refi would have you paying, and mortgage free. In maybe even less than 18 months - depending on murphys and how much he is willing to contribute. I think he indicated not the entire 1k? But how willing are you to give up that roth money? And ask for additional help from someone? - who let's face it! - really owes you? Your prudent ways, knowledge of the system, and parental diligence means that x1 is not on the hook for half of 100k tuition bill. He's willing. you have an end date, and he should thank you. Saves everyone loads.
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 13:52:19 GMT -5
I don't think I could take any more money from him without feeling really crappy about it. He's paid me more than the courts would have ordered him to for 15 years and never was so much as a week late. He doesn't make that much (like mid to upper 70's), is 57 and has two young kids. He said he's going to start college savings accounts for them with some of the money. In a lot of ways I'm happy that financial tie is being cut.
I expected all the 30 year refinance comments, but if I go with the 17 month plan, it seems pretty easy to get to where I can take home enough to pay the mortgage. Like, this year. I'll probably meet my 401K goal by the end of Sept, then October through December I can scale it way back. I'd have to up it again in January, but I normally get a big tax refund in March that could carry me a few months.
|
|
raeoflyte
Senior Associate
Joined: Feb 3, 2011 15:43:53 GMT -5
Posts: 14,716
|
Post by raeoflyte on Jun 15, 2020 14:22:42 GMT -5
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 Those are your balances, but if things have gone perfectly, you still have your Roth and your $12k. You're still close to paying off your mortgage just with a little wiggle room if things don't work out.
|
|
raeoflyte
Senior Associate
Joined: Feb 3, 2011 15:43:53 GMT -5
Posts: 14,716
|
Post by raeoflyte on Jun 15, 2020 14:25:35 GMT -5
What about calling your current mortgage company and asking them if they'd do a recast? Use your Roth to pay down your mortgage to $32k, recast it over your remaining term? Not the path I'd choose, but would get you closer to your paid off goal and leave you $12k for issues, and lower your payment I think to where it would be comfortable on your new income.
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Jun 15, 2020 14:29:39 GMT -5
Have you fixed your siding? How old is your roof?
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 14:36:13 GMT -5
I really DON'T want to spend down my Roth. In my ideal little plan, where I keep my job and Ex doesn't go off the rails, it goes like this...I manage for the 29 months, then cut back 401K contributions to take home $1000/month more. I keep going like that for a couple years and then maybe pay it off in 2025 with Roth when the balance is down to less than 20K. That gives the Roth another 5 years of growth. 2026 is the first FAFSA year for Carrot. I have no idea what the situation will be like then, but it would be nice to have the option to start shoveling a bunch into retirement again by not having a mortgage.
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 14:40:20 GMT -5
Have you fixed your siding? How old is your roof? No, I have not. There are a few bad spots in the back, but they're not getting worse. 90% of the siding is fine. I did use duct tape to seal off the electrical box that had rotten siding around it. I could actually do that to the holes as well. You can buy duct tape in almost any color now, I could get it to match the siding. The roof was replaced by insurance after a hail storm in 2010 with 40 year shingles. Maybe if I wait long enough we'll get another hail storm that damages the siding.
|
|
bean29
Junior Associate
Joined: Dec 19, 2010 22:26:57 GMT -5
Posts: 9,920
|
Post by bean29 on Jun 15, 2020 14:57:58 GMT -5
I know you know the FAFSFA rues inside and out, but I thought your FAFSA was good for two years now? Can't you coast for a year and worry about your income next year?
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Jun 15, 2020 14:58:11 GMT -5
I don't think I could take any more money from him without feeling really crappy about it. He's paid me more than the courts would have ordered him to for 15 years and never was so much as a week late. He doesn't make that much (like mid to upper 70's), is 57 and has two young kids. He said he's going to start college savings accounts for them with some of the money. In a lot of ways I'm happy that financial tie is being cut. I expected all the 30 year refinance comments, but if I go with the 17 month plan, it seems pretty easy to get to where I can take home enough to pay the mortgage. Like, this year. I'll probably meet my 401K goal by the end of Sept, then October through December I can scale it way back. I'd have to up it again in January, but I normally get a big tax refund in March that could carry me a few months. I guess best for you to try and see how this works, how long you can string this along. Rates likely won't shoot up soon/quickly - so can revisit down the road a bit.
|
|
gambler
Well-Known Member
"the education of a man is never completed until he dies" Robert E. Lee
Joined: Dec 21, 2010 16:39:24 GMT -5
Posts: 1,576
|
Post by gambler on Jun 15, 2020 14:59:21 GMT -5
I will throw this out because it happened to me. I was suppose to stop child support at 18. Because kid decided to go to 2 year collage ( he is as dumb as a rock takes after mom). I got taken back to court and had to pay until 21.
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Jun 15, 2020 15:01:26 GMT -5
Have you fixed your siding? How old is your roof? No, I have not. There are a few bad spots in the back, but they're not getting worse. 90% of the siding is fine. I did use duct tape to seal off the electrical box that had rotten siding around it. I could actually do that to the holes as well. You can buy duct tape in almost any color now, I could get it to match the siding.The roof was replaced by insurance after a hail storm in 2010 with 40 year shingles. Maybe if I wait long enough we'll get another hail storm that damages the siding. you just might be a redneck
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Jun 15, 2020 15:03:03 GMT -5
I will throw this out because it happened to me. I was suppose to stop child support at 18. Because kid decided to go to 2 year collage ( he is as dumb as a rock takes after mom). I got taken back to court and had to pay until 21. what the actual hell?
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 15:07:05 GMT -5
I know you know the FAFSFA rues inside and out, but I thought your FAFSA was good for two years now? Can't you coast for a year and worry about your income next year? You still do have to fill it out every year. I think you're thinking about the lookback which is now two years back where as it used to be one. So, the FAFSA he fills out this October for the 2021-2022 school year will use our 2019 tax data. They did that because it was hard for people to make all the deadlines when they may not even have their taxes done yet.
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 15:12:04 GMT -5
No, I have not. There are a few bad spots in the back, but they're not getting worse. 90% of the siding is fine. I did use duct tape to seal off the electrical box that had rotten siding around it. I could actually do that to the holes as well. You can buy duct tape in almost any color now, I could get it to match the siding.The roof was replaced by insurance after a hail storm in 2010 with 40 year shingles. Maybe if I wait long enough we'll get another hail storm that damages the siding. you just might be a redneck I would add Spray Foam and WD-40 to the list.
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 15:15:54 GMT -5
$380 - All insurance (3 autos, home, 2 life and umbrella) $225 - Property taxes (although I usually get almost half that back) $300 - LP, electric, garbage, 3 phones and TV. so this is 905 - current mortgage is about 1300? so about 2200 month bills vs 2000 take home pay.? before food, clothes, other expenses are added in? Before food, clothes, childcare, private school, spendy cat food, farrier bills, gas, piano lessons...etc...etc... This is why I want no mortgage.
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Jun 15, 2020 15:36:21 GMT -5
We have light blue siding, and the company that changed out some of our windows put some small holes in it. We used some blue painters tape over the holes. One of these days, I'd like to change out all the siding, but I don't want to spend the money.
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 15:37:46 GMT -5
Well, I don't like the 30 year option at all, but because EVERYONE else seems to think it's the best route, I took the step to email my CU to find out current rates (they'e not advertised online right now due to market volatility), and I kind of explained the situation a little with where I was at loan-wise now, and what I was looking for. And she got back to me already. 2.975%, and closing costs would be approximately $2800
|
|
Deleted
Joined: Apr 24, 2024 9:47:42 GMT -5
Posts: 0
|
Post by Deleted on Jun 15, 2020 16:14:51 GMT -5
She said the closing costs on the 10 year Rapid Refi were $500-$700.
10 year - $907/month 15 year - $660/month then 36K balloon. 20 year - $545/month then 55K balloon.
|
|
debthaven
Senior Associate
Joined: Apr 7, 2015 15:26:39 GMT -5
Posts: 10,325
|
Post by debthaven on Jun 15, 2020 16:21:46 GMT -5
MPL, I think it's worth asking about a 15Y and 20Y loan too.
Like Rukh I don't see the problem in accepting your ex 1's offer of reduced CS. Your DS1 is 17 or 18, he isn't "launched" yet, he'll still be spending plenty of time at home (especially with COVID/shorter semesters/online classes and exams). And it's thanks to YOUR diligence that DS1 got the FA package he got!
I'm wondering, do you think there will be money left over from DS1's 529 since he got quite a bit of FA? If that's the case obviously I would never suggest using it now, but could it be a possibility for down the road?
Other thought ... have you ever asked for a raise? You've been there forever, you seem pretty invaluable. Or tried to change jobs and find one that's better paid? Sometimes I feel that they don't pay you what you deserve because you're a "lifer" to them ...
Otherwise, I'd look into a 15Y or 20Y refi. I get how the 30Y would be sort of depressing, even if it would give you the most latitude.
|
|