3rd refinance, back to original loan amount

[Mrs. Dinero]

Originally purchased home in 2003 for $185k. We’ve taken out cash last 2 refinances this one we won’t.

Using our home as a bank has benefited us.

I realize we’ve paid plenty extra in interest but no where near what we’ve made from investments. Investments are now > $800k

Scary to think we are back to where we were although we now have $65k in equity. Cash out was to improve home.

We have no debt except mortgage.

Would love to read your thoughts on this.

[Mrs. Dinero]

We haven’t signed anything yet. Both credit scores are 820+. They’ve already ran it (received 4 notices- that’s pretty cool knowing we’ll know if someone ever tried to). VA refinance @3% APR with very reputable company. No closing costs just origination fee.

Last refinance was in 2017 @ 3.875% for $200k

[buystoys]

I would love to refinance as our house value has jumped so much in the past seven years.  DH hates that we have a mortgage because our last house was paid off.  We split the difference:  we have a mortgage now, I pay extra on it each month, and we won't refinance.  It makes him feel better to know that the balance is going down.

[giramomma]

When are you retiring? Aren't your kids college age?

What's the heath care situation when you retire?

I'm still hoping to retire between 60 and 62. My health insurance costs will be 2K a month.  Because of that, we'll actually need more income in early retirement than we have to work with now, which is crazy.

If we took a cash out mortgage, our mortgage and health insurance would be 3500 in expenses alone. I am risk adverse, and that makes me uncomfortable. What can I say, I'm not Phil.

ETA: While we have less in assets, our NW is still very close to the 1mil mark, and we're 45.

[Mrs. Dinero]

45 here too, mid life and loving it Yes, kids are in college.

I’m hoping that what we contribute to investments currently ($2,400/month) will cover any health care costs.

DH is fed employee, hopefully health care options for retirees are available.

DH will retire in 11 years. I’m not sure about me. I really enjoy working.

[schildi]

I think you are doing fine.

As long as you are aware of the details (more interest, etc), and are responsible (sounds like you are), this is an approach that likely gets you ahead.

We just refinanced ourselves. How much were your origination fees?

We got into a 2.50%, 30 year fixed rate, no points. Opted out of escrow as well, I don't like the idea of escrow payments. Total fees (only 3rd party) were $2,700, rolled into the loan. So no out of pocket cost. Previous mortgage was at 3.25%, this is saving us about $250 per month in interest at the moment, so I figure about 11 months to cut even (recoup the closing cost). Anything under a year is for sure worth a refi, IMO.

[vonna]

VA rates are lower than 3% right now.  I would check with others.  You should be able to get 2.75% or lower

[minnesotapaintlady]

I really hate having a mortgage and mine is small now. I refinanced last year at 2.7% and my payment is only $383, but I don't want it around when I retire in probably 10 years, so I've been paying extra. I am definitely not a Phil, but I'm doing ok anyhow.  My investments are also around 800K with another 200K in equity.

[schildi]

Feb 4, 2021 10:33:32 GMT -5 vonna said:

VA rates are lower than 3% right now.  I would check with others.  You should be able to get 2.75% or lower

I agree. Try the Costco program. We just closed at 2.50%, non-VA. They are showing rates as low as 2.25% right now (I just checked), for VA loans. That's for a 30 year FRM, no points, no lender fees. You can do better than 3%!

[Wisconsin Beth]

I don't think we could get a loan.  We owe under $25K I think and banks don't want to do mortgages for that little, we had a hard time getting a loan for under $50K when we tried about 4 tears ago.  WE managed it.  With my health the way it is, i'd rather have the extra cash and fewer bills.  But that's me and my current situation.  

[Mrs. Dinero]

Dang it! Why didn’t I check with you all before having them run credit?

[minnesotapaintlady]

There is a 14 day window for mortgage credit checks following the first pull.  So you can have a dozen credit checks in that time and they count as 1.

[haapai]

Feb 4, 2021 9:47:54 GMT -5 Mrs. Dinero said:

Originally purchased home in 2003 for $185k. We’ve taken out cash last 2 refinances this one we won’t.

Using our home as a bank has benefited us.

I realize we’ve paid plenty extra in interest but no where near what we’ve made from investments. Investments are now > $800k

Scary to think we are back to where we were although we now have $65k in equity. Cash out was to improve home.

We have no debt except mortgage.

Would love to read your thoughts on this.

Truth to be told, I both envy you and consider myself very lucky.

I have a tiny mortgage at 3.75%.  The terms of the mortgage also require me to carry mortgage insurance (.25% of the average principal balance per year) for about another year. 

I've been watching rates decrease for about two years and making elaborate spreadsheets that reinvest the reduction in PITI at various rates -- usually 8,10 and 12% annually.

Unfortunately, when you have a mortgage balance under $40K and refinancing costs of $2400 or even $1200 rolled into the new balance, you can get some long-ass break-even points.  So far, I haven't found a loan rate or a return on investment that gives me a break-even point that I like or a total return in 15 years that justifies the risk of losing money if I sell before breaking even. 

So yeah, I envy your opportunity to make good moves. 

On the other hand, I am still blessed with a tiny mortgage. 

[Ryan]

I'm on my 4th refinance in 10 years.  First 2 were within the first year, last one was a year ago, and now about to close in a couple weeks.  I refinanced at 2.75% with a lender credit of some amount, I probably could've gotten lower but it's easier for me to go through the same guy I've been using.  I also follow the bogleheads refinance threads and seems like most people are getting 2.65-2.75% right now.

I don't do cash outs, but I do always extend my loan back out to 30 years.  As a result, my loan amount is much less now and I always take the extra savings and put it in a vanguard account.  I did a little mini cash out last year because I skipped a mortgage pymt and got reimbursed for escrow, so I put that and then any monthly savings into a vanguard account.  Total gains on that account this year have been $2358.  I'm hoping that once I get to the 22 year mark (when I would've paid it off) that the value in the account far exceeds the payoff.

[Miss Tequila]

Feb 4, 2021 10:42:04 GMT -5 schildi said:

Feb 4, 2021 10:33:32 GMT -5 vonna said:

VA rates are lower than 3% right now.  I would check with others.  You should be able to get 2.75% or lower

I agree. Try the Costco program. We just closed at 2.50%, non-VA. They are showing rates as low as 2.25% right now (I just checked), for VA loans. That's for a 30 year FRM, no points, no lender fees. You can do better than 3%!

Can you post a link to that? I just paid my house off but with practically free money, I could find an investment for it

ETA: I googled it. I have to join Costco to even get a quote. And we won’t qualify for VA. We don’t have a Costco around here so I would have to join just to refinance. Not that I’m above that if it’s worth it

I’m definitely going look into rates. I made a decision to pay off my
Mortgage because I was retiring and it made me feel good. Financially, it was a dumb move. But that peace of mind does count for something!

[Mrs. Dinero]

Thank you all again. Just saved us $10k in interest.

[schildi]

Feb 4, 2021 17:13:59 GMT -5 Mrs. Dinero said:

Thank you all again. Just saved us $10k in interest.

Congrats, good to hear!

Which route did you go, that saved you $10k, if you don't mind me asking?

[Mrs. Dinero]

Looked at Costco Program mentioned (not a member either) Put in initial contact info and got to the rates. Saw Company I liked and called them direct. 2.75% no points $300 credit towards title fee (~$1,200).

1st company called told them I was going a different route. They asked and said. Great rate.

This was today. APRs slightly increased today.

$10k is the savings of going from 3% to 2.75% on the loan amount

[CCL]

I refinanced mine twice in 2020. First time was 3.5%. Second time was 2.625% I paid $300-$400 in closing costs both times. I'm saving a couple hundred every month.

I don't care if I never pay my house off. No way I'm taking $$$ out of investments to pay it off.

[CCL]

Feb 4, 2021 19:56:00 GMT -5 Mrs. Dinero said:

Looked at Costco Program mentioned (not a member either) Put in initial contact info and got to the rates. Saw Company I liked and called them direct. 2.75% no points $300 credit towards title fee (~$1,200).

1st company called told them I was going a different route. They asked and said. Great rate.

This was today. APRs slightly increased today.

$10k is the savings of going from 3% to 2.75% on the loan amount

Is that $10k savings for 30 years? That doesn't seem like much to me.

[Mrs. Dinero]

Yeah, over 30 years. I’ll take it though for an hour of my time.

[schildi]

Good deal, happy my post helped! 

[Miss Tequila]

Feb 4, 2021 19:56:00 GMT -5 Mrs. Dinero said:

Looked at Costco Program mentioned (not a member either) Put in initial contact info and got to the rates. Saw Company I liked and called them direct. 2.75% no points $300 credit towards title fee (~$1,200).

1st company called told them I was going a different route. They asked and said. Great rate.

This was today. APRs slightly increased today.

$10k is the savings of going from 3% to 2.75% on the loan amount

Ooh, thanks for the tip! I didn’t put in any information because it asked for a member number.