7 ms·

I just refinanced at 2.0% for 15 years in California and I was feeling like a champ for timing the bottom.

justinzollars 6y ago
What's the point of a 15 year when the 10 year nominal rate - inflation rate is less than the gains you will make in income?
- 1stcity3rdcoast 6y ago
  Opportunity cost of the higher monthly payment surely factors in?
  - mywittyname 6y ago
    Yeah, I got a 15 year loan to save about 25% on my interest payments (3% vs 4%). Looking back, that was totally stupid because had I got a 30 year loan, and invested the difference (which I absolutely would have), I would earned a substantially greater return from the resulting stock boom.
    - 1stcity3rdcoast 6y ago
      Exactly and makes total sense. Plus, not everyone has infinite income, so people are "rate limited" into choosing the 30 over a 15 or 10.
  - ahepp 6y ago
    Isn't that another advantage of 30 year?
    - 1stcity3rdcoast 6y ago
      Yes, especially if you have an alternative place to park the money that earns N+1, where N is your interest. Anything above that is marginal gravy.
scotcha1 6y ago
which provider did you go with to get the 2%?
- DevKoala 6y ago
  SemperHome late October.
acwan93 6y ago
I went through 3 refinances last year (also in CA) all at little to no closing costs for a 30 year fixed (4.00% → 3.25% → 2.5%). The math made sense every single time when factoring in the lower monthly payments and negligible closing costs. At this point I don't know what the point of the loan is anymore. Is there really any realistic intention to ever pay it off? Every single time I thought I had timed the bottom, but rates continue to drop.
- lostmsu 6y ago
  How come you had no closing costs? How much really they were?
  - acwan93 6y ago
    My broker said it was a standard $3K closing cost if at zero points, but I ended up taking some negative points as a credit towards closing costs.
  - tathougies 6y ago
    I refinanced last year for a 0.125% better interest rate, and the bank paid me $1000 to do it. It was the easiest decision I ever made. Basically, there was $5000 in closing costs and the bank paid me $6000 in points. If I paid money I would have gotten a lower rate, but I already had a great rate. Now, I'm refinancing again, but I'm paying some money. All in all, my net refinancing costs will be around $2000, but I have halved my interest rate almost, and will now be able to pay my home off about 10-15 years earlier (we just bought two years ago).
- nostrademons 6y ago
  The point of paying off loans at this point is so that when the whole system breaks down and people are looking for someone other than themselves to hold the bag, you have no business relations with anyone and nobody with a reason to point at you. Folks who are deeply entangled in the financial system will have a lot of potential enemies if the system fails to supply the expected standard of living to everyone. Folks who are basically self-sufficient with no major financial commitments can ride it out in obscurity. "Neither a borrower nor a lender be / For loan oft loses both itself and friend." -- Polonius, from Hamlet
covid21 6y ago
Why can't people borrow in foreign countries? Mortgages in Germany seem to be below 0.7% atm.
- mrep 6y ago
  That exposes you to currency risk. Right now, 1 euro trades for about 1.23 dollars but that can go up or down (1:1.12 a year ago for example) which would effect your payments over the life of the loan because I get paid in dollars but german banks want to get paid back in euros.
- markvdb 6y ago
  That won't even work within the EU. All sorts of barriers exist between EU states making this extremely difficult if not impossible. You'll need a salary or other reliable income sources in the EU member state where you're buying, banks there won't offer you a mortgage. Never mind you're earning 5 times the bank employee's salary, just in another member state. You'll need free and clear ownership of a home in the EU member state where you're earning, or banks there won't offer you a mortgage for your home in another EU member state. You'll only get the loan by mortgaging the property local to the bank, not the actual property you're buying. Some limited exceptions exist for popular holiday countries, but banks will make you pay for that "privilege".
hbcondo714 6y ago
Would you mind disclosing which lender you went with to get 2.0%? Are you paying points? I'm using Better.com for a refi in CA also but the "best" I can get is 2.625% with 0.053% ($330) in closing costs. They don't even list 2.0% Edit: Better.com is actually listing 2.0% rates but with $9,100 in points, based on my property and location in CA.
- chrisabrams 6y ago
  Better is gonna give you pretty high rates -- try shopping with a local lender.
- DevKoala 6y ago
  SemperHome. I locked the rate back in October and the closing took over two months, but they delivered the rate I wanted. No points either. Also, the rates have gone up since then, I keep getting Zillow alerts about it.
Hamuko 6y ago
Do Americans always have fixed interest rates?
- elindbe3 6y ago
  No, there are fixed and variable rate mortgages.
  - sgerenser 6y ago
    Although fixed rate mortgages are far more popular because they are subsidized by the federal government. Right now I can choose between a 15 year fixed rate mortgage at 2.375%, or a 30year fixed at 2.75%, or a 5/1 adjustable for 2.75%. Obviously nobody is picking the adjustable rate.

What's the point of a 15 year when the 10 year nominal rate - inflation rate is less than the gains you will make in income?

1stcity3rdcoast 6y ago
Opportunity cost of the higher monthly payment surely factors in?
- mywittyname 6y ago
  Yeah, I got a 15 year loan to save about 25% on my interest payments (3% vs 4%). Looking back, that was totally stupid because had I got a 30 year loan, and invested the difference (which I absolutely would have), I would earned a substantially greater return from the resulting stock boom.
  - 1stcity3rdcoast 6y ago
    Exactly and makes total sense. Plus, not everyone has infinite income, so people are "rate limited" into choosing the 30 over a 15 or 10.
- ahepp 6y ago
  Isn't that another advantage of 30 year?
  - 1stcity3rdcoast 6y ago
    Yes, especially if you have an alternative place to park the money that earns N+1, where N is your interest. Anything above that is marginal gravy.

scotcha1 6y ago

which provider did you go with to get the 2%?

DevKoala 6y ago
SemperHome late October.

acwan93 6y ago

I went through 3 refinances last year (also in CA) all at little to no closing costs for a 30 year fixed (4.00% → 3.25% → 2.5%). The math made sense every single time when factoring in the lower monthly payments and negligible closing costs. At this point I don't know what the point of the loan is anymore. Is there really any realistic intention to ever pay it off? Every single time I thought I had timed the bottom, but rates continue to drop.

lostmsu 6y ago
How come you had no closing costs? How much really they were?
- acwan93 6y ago
  My broker said it was a standard $3K closing cost if at zero points, but I ended up taking some negative points as a credit towards closing costs.
- tathougies 6y ago
  I refinanced last year for a 0.125% better interest rate, and the bank paid me $1000 to do it. It was the easiest decision I ever made. Basically, there was $5000 in closing costs and the bank paid me $6000 in points. If I paid money I would have gotten a lower rate, but I already had a great rate. Now, I'm refinancing again, but I'm paying some money. All in all, my net refinancing costs will be around $2000, but I have halved my interest rate almost, and will now be able to pay my home off about 10-15 years earlier (we just bought two years ago).
nostrademons 6y ago
The point of paying off loans at this point is so that when the whole system breaks down and people are looking for someone other than themselves to hold the bag, you have no business relations with anyone and nobody with a reason to point at you. Folks who are deeply entangled in the financial system will have a lot of potential enemies if the system fails to supply the expected standard of living to everyone. Folks who are basically self-sufficient with no major financial commitments can ride it out in obscurity. "Neither a borrower nor a lender be / For loan oft loses both itself and friend." -- Polonius, from Hamlet

covid21 6y ago

Why can't people borrow in foreign countries? Mortgages in Germany seem to be below 0.7% atm.

mrep 6y ago
That exposes you to currency risk. Right now, 1 euro trades for about 1.23 dollars but that can go up or down (1:1.12 a year ago for example) which would effect your payments over the life of the loan because I get paid in dollars but german banks want to get paid back in euros.
markvdb 6y ago
That won't even work within the EU. All sorts of barriers exist between EU states making this extremely difficult if not impossible. You'll need a salary or other reliable income sources in the EU member state where you're buying, banks there won't offer you a mortgage. Never mind you're earning 5 times the bank employee's salary, just in another member state. You'll need free and clear ownership of a home in the EU member state where you're earning, or banks there won't offer you a mortgage for your home in another EU member state. You'll only get the loan by mortgaging the property local to the bank, not the actual property you're buying. Some limited exceptions exist for popular holiday countries, but banks will make you pay for that "privilege".

hbcondo714 6y ago

Would you mind disclosing which lender you went with to get 2.0%? Are you paying points? I'm using Better.com for a refi in CA also but the "best" I can get is 2.625% with 0.053% ($330) in closing costs. They don't even list 2.0% Edit: Better.com is actually listing 2.0% rates but with $9,100 in points, based on my property and location in CA.

chrisabrams 6y ago
Better is gonna give you pretty high rates -- try shopping with a local lender.
DevKoala 6y ago
SemperHome. I locked the rate back in October and the closing took over two months, but they delivered the rate I wanted. No points either. Also, the rates have gone up since then, I keep getting Zillow alerts about it.

Hamuko 6y ago

Do Americans always have fixed interest rates?

elindbe3 6y ago
No, there are fixed and variable rate mortgages.
- sgerenser 6y ago
  Although fixed rate mortgages are far more popular because they are subsidized by the federal government. Right now I can choose between a 15 year fixed rate mortgage at 2.375%, or a 30year fixed at 2.75%, or a 5/1 adjustable for 2.75%. Obviously nobody is picking the adjustable rate.