Refinance Questions
10 years ago
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- 10 years agolast modified: 10 years ago
- 10 years ago
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Refinance w/401K or try to get modification from bank?
Comments (8)Also, a lot of people who anticipate only being between jobs for a short time will play the COBRA waiting game and use it as a temporary insurance. They give you 60 days to decide so if you don't decline it, you can be covered in the case of emergency for those two months. If you don't end up needing insurance, then you don't pay anything but if you do need it within those 60 days, you can elect COBRA and it covers you retroactively from the day it was offered. Also, once you elect it, you have 45 days to send in payment, so you could elect it and then just not pay if you don't need it, So in theory you could have over 100 days of emergency insurance for free if you don't end up needing it, and you would only have to pay the premium if you do need it, which is far less than a hospital bill . I don't know how strictly ethical it is to do that but it's how their rules are set up and it is often a lifesaver for people in difficult situations....See MoreDave Donhoff - refinance questions...
Comments (10)Hi rivkadr, Okay, so some clarifying questions, then. I expect I will sound very stupid, but please recognize that I generally don't deal with money matters too much myself, so a lot of this is over my head. PUHLEAZE!!!! You deserve (and GET) my sincere respect for so MANY reasons!!!! A) You're willing to OPEN your MIND to serious financial topics (and not just swallow the emotional poop passed down from those who've never tried to understand!) B) You're willing to be completely OPEN WITH YOUR DETAILS (even if anonymously... you have no idea how many people are afraid of simply being real, even when nobody can know who they really are!!!) C) You are SO GENEROUS to do so out in the open on a public message board, where your learnings can be silently read and absorbed by others who WISH they had your guts!!!!!!!!! I cannot emphasize enough THE HONOR YOU DESERVE for taking this on, step by step, out in the open!!! TRUST me when I say, there are MANY folks who feel much "dumber" about their questions... and hate the fact they haven't had the courage to step out like you are. Your COURAGE trumps all... and it is the ONLY way anyone gets "smart!" OK, with your questions; 1) Itemize your current liabilities, and for each; Liabilities, I assume you mean things like student loans, mortgages, etc? i.e. stuff we owe money on. Exactly... make a laundry list for us here. If you have a recent credit report it will show much of what we are asking about... otherwise gather up your monthly bills. Example; $461,356 1st mortgage, (pull out your NOTE to check on the following,) 5 yr ARM in 3rd year, (amortized, or interest-only?) Start date was July X, 2005 Initial Fixed rate is X% Margin is 2.25 (or it is 2.75, or other?) Index is 1 month LIBOR (or 6 mo LIBOR? 1 yr LIBOR? Treasury index?) $45,356 Student Loan, consolidated from multiple loans, Interest rate is X%, minimum payment required is $YYY (or a % factor, if you know,) $12,486 Provident Visa card, 8.9% rate, 2% of principal minm payment (By the way... the 2% of principal is the standard minimum payment for revolving credit.) $8,594 Ford auto financing, 3.5% rate until 1/1/2010, then 8.9%. 8 year loan, minm req'd payment $x,xxx You get the idea... 2) Itemize your appreciating assets, and for each; What would an appreciating asset be? Are these like stocks? We don't own anything like that anymore. We have my husband's 401k -- does that count? Appreciating assets are real estate, stocks, mutual funds, bonds, cash-value life policies, pensions, annuities, securities held INSIDE your 401(k), IRA and ROTH accounts, and similar. Non-appreciating assets are your non-cash-value (term) insurance policies of all types, anticipated inheritances, business ownership, personal effects (tools, furs, jewelry, etc.) 3) What is your personal realistic exepected growth situation for your home over the next 10 years? Expected average annual rate of growth, 10 years? Total growth in dollars? I have no idea how I would estimate things like that :( I have no clue on most of your growth rate questions (except maybe our expected income -- I can hazard a guess on that). That is really *OK*!!!!!! When the answer is "I have no idea" it triggers some follow-on questions; (And its perfectly acceptable to "cheat" by asking realtor friends, checking Zillow, or Googling your local negihborhood name along with the keywords of "appreciation rates in Irvine" (or wherever.) Are you familiar with the past longterm trend of real estate in your area? If so, what was it? Do you believe that the future longterm trend will be significantly different? If so, in what way? 4) What is your estimated current NET Worth? Can you have a negative net worth? Unfortunately, yes... in fact the MAJORITY of the general public has a negative net worth. That happens when the total cash value of everything you own (and could sell,) is less than the total repayment balance of all the debts that you owe. I just reran our budget; due to my husband's job changes and a raise on my part, we're actually making an extra $3500 a month. Does that change your little form up above at all? That doesn't change the questions (especially the "divvy up your 1st and 2nd extra $1,000,) but it does give you some extra growth power, which is ALWAYS a good thing when you know how to employ it most effectively. ONCE AGAIN... I HONOR YOU FOR YOUR UP-FRONT COURAGE!!!! (I suspect you are "giving" people a great deal in this exchange!!!) Cheers, Dave Donhoff Strategic Equity & Leverage Planner...See MoreRefinance question! Please advise!
Comments (10)Hi Eosinophil, FIRST of we need to back away from the minutiea... up, up, up to get some bigger picture perspective, like an architect starting with very simple pencil sketches on a blank piece of paper... so that we can THEN come back down to the nitty-gritty and micro-fit the situation to your specifics. What is more important to you; Eliminating your outstanding leverage balances on an accelerating basis, or stopping the monthly bleeding? (These are at counter-points for you currently.) Are you more concerned about the balances on one property versus the other... or about your overall family position on balance? How much accrued liquid cash reserves do you have socked away? How much is your gross family monthly revenue? How much is your current gross (including minimum payments for all debt and homes) family cost of living? You are paying to rent the money you are using for retaining the ownership of the old home (the interest costs.) This interest is a "sunk cost" each month you pay it, if you have no tenants paying you for its useage. Is your continuing ownership giving you *any* appreciation currently? (Keeping in mind that market appreciation is a VERY tentative guess, at best, in the current environment... and if it is negative, you need to honestly figure it that way as well.) IF so, how much is the appreciation when calculated into monthly dollars? How much of your sunk interest costs are being ofset by your potential monthly appreciation gained? Whatever your sunk costs of interest, minus your dollars from appreciation (or plus the dollar costs, if depreciating currently,) is what you can call your "monthly burn." This is the consumption of your net worth you are incurring to continue carrying this property. NOW... this home CAN be sold (gotten under contract with a 30 day escrow period, or less) within a 2-6 week marketing time, AT SOME LEVEL OF PRICE, AND ADVERTISED EXPOSURE. This "price level" is what we call the "quick-sale price value." If your agent were to (honestly) determine the realistic quick-sale price level in that local market... it would likely be lower (perhaps much lower) than where you are holding out right now... and the agent would likely need to ramp up some significant marketing costs... which they might only be comfortable doing with some funding (or guarantees) from you. All of this, naturally, is going to be a revenue burden off of what you were previously hoping to sell your home for. NONETHELESS... this is a numeric exercise that is CRITICAL to do... RIGHT NOW... because it will give you the numerical difference between where you are right now in realistic net worth, were you to do this immediately..... VERSUS how much you are "burning through" on your monthly burn rate if you simply close your eyes, cover your ears, pray really really hard, and just keep waiting it out. KNOWLEDGE AND AWARENESS IS POWER... and you can't make an objective financial decision unless/until you have the actual facts in front of your face to review and think about. ========================================================= OK... soapbox aside..... *IF* you decide that you have reason to believe that simply waiting longer will actually be worth your while in a higher sale price... then there *is* investment property financing available in the range of 3.5% to 4.5% APR, on an interest-only basis, up to 70-75% LTV, strictly on a fully documented (income, employment, assets) basis... which could very significantly reduce your monthly burn overall. Its something I have at my firm... but not to be 'spammy' there may be other brokers (perhaps your regular loan broker) who have it as well. Its not a retail program, so you'd definitely need to connect with your broker for it. ========================================================= ALL THINGS CONSIDERED... (And in truth, we haven't seen enough details to truly consider all things...) I would *PROBABLY* be leaning toward advising you to take a deep breath, swallow hard, plug your nose... and have your agent re-price the home to the local quick-sale price... and get it over with while we're in the summertime "moving & home-buying season." All the best! Dave Donhoff Leverage Planner...See MoreGood time to refinance?
Comments (17)Definitely refinance! The rates you were quoted were good quotes as of right now. And you’ve been paying 5.25%. Your principal balance has gone down after 16 years of payments, so the amount you’re refinancing is lower than your original loan. Add that to the lower interest rate, and you should save a fair bit. Personally, I would not go for a 30 year loan-if you have had your original loan for 16 years,that means if you did nothing you still only have 14 years before it is paid off. So the switch to a 15 year makes sense. With the extra money you save refinancing-say in the $200 to 300 a month range, you can make extra payments any time you want-just make sure you mark those extra payments as “against principal only”. And watch your statements and make sure they go directly against principal. Make sure you get the terms of the refinance-the rate you are getting, the term (15 year, 30 year) and especially an itemized list of closing costs, in writing before going ahead....See More- 10 years agolast modified: 10 years ago
- 10 years ago
- 10 years agolast modified: 10 years ago
- 10 years agolast modified: 10 years ago
- 10 years agolast modified: 10 years ago
- 10 years ago
- 10 years agolast modified: 10 years ago
- 10 years agolast modified: 10 years ago
- 10 years agolast modified: 10 years ago
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