Wells Fargo customers - ReFi Mortgage w/ no closing costs ** Edit ** Still warm, but cooling off

[KevinH]

Originally posted by: papaschtroumpf

Originally posted by: KATX

edit: I hope some of you people who are only saving $60/mo. realize that you are re-amortizing your loan. For example, let's assume that you have monthly P&I payments of $1,000 and that you have paid on your existing 30 year loan for 24 months (2 years) already. You save $60 per month with your new loan, bringing your new payment down to $940, but you are adding 2 years back onto your loan going back to 30 years. Saving $60 per month saves you $20,160 over the next 28 years, but adding on those 24 more months of $940 will cost you $22,560 (this monthly savings that becomes a long-term loss is known as the "banker's secret"). In addition, the $60 off your monthly payment is all interest, meaning that your mortgage interest tax deduction will be $720 less in the 1st year of your mortgage alone. Assuming a low 15% tax bracket, that means you'll pay about $108 more in taxes next year.

You might want to re-think that "easy math".

Well, I agree with your math but not quite with your conclusions.

1. In your example the person can increase their payments on their own just enough to cause the mortgage to last only 28 years.

2. I do not believe this so called "banker's secret". You seem to imply that bankers prefer a 30 year mortgage over a 28 year one when both have the same interest rate. If this were true, interest rates for 30 year mortgages would have been lower than those for 15 year mortgages. But they are not.

3. Losing interest deduction when your rate goes down is like your income taxes increasing when you get a raise. But no one rejects a raise.

Also your math assumes that you're planning on staying in the house till the mortgage is paid off, which in my line of work is unlikely.

Which means what exactly? OF COURSE IT DOES! If you're going to move out, then this is irrelevant to you. If that's the case, get a 7/1, 5/1, 3/1 ARM and the issue of 30 or 15 is irrelevant to you. In fact, GET AN OPTION ARM! You'd be in bliss!!! Do you plan on moving out between 1-3 years and have good credit? Whoa! Hey, ho, Option is for you! How would you like to pay negative amort and make out in the positive via the appreciation of you home! Ding ding! Not to be a sarcastic ass...which I AM.... If that's the case, then the discussions above are meaningless to you.

There ARe those that do stay in there homes, albeit RARE, for the term of their loan. That said, what YOU just said, is COMPLETELY irrelevant to the scenario that Vic drew out. If you want to discuss this PM me and we can work something out because if these are the plans you have then sheesh, there are programs up the yin yang for anyone with alternative living and spending habits. If so, I can help. I won't advertise it like some people who are jumping the gun but fact of the matter is the current 4.75 on a Wells Deal as it was painted by the OP wasn't even that great (although come Monday it will seem that way). That said, given the scenario discussed, Vic is dead on. PERIOD.

This is all moot though as come Monday, these discussions are done and over. In fact, anyone who wants the bottom line on info, PM me and I'll give you a number where you can call me personally.

 

[KATX]

Originally posted by: Vic

Originally posted by: KATX
Well, I agree with your math but not quite with your conclusions.

1. In your example the person can increase their payments on their own just enough to cause the mortgage to last only 28 years.

2. I do not believe this so called "banker's secret". You seem to imply that bankers prefer a 30 year mortgage over a 28 year one when both have the same interest rate. If this were true, interest rates for 30 year mortgages would have been lower than those for 15 year mortgages. But they are not.

3. Losing interest deduction when your rate goes down is like your income taxes increasing when you get a raise. But no one rejects a raise.

1. True. Or ideally even shorter. But most people don't do such a thing voluntarily. Others may find out that the rate improvement was so slight, that the only real benefit of the refinance was the reamortization.

2. Risk exposure, pimple-popper. While 30 years are more profitable, they're also more risky. Simple rule of finance, junior high-schooler.

3. No, mortgage interest is a deductible expense, not income. Different rules apply then when calculating taxes.

1. Amen.

2. So which is it, do bankers prefer a 28 year mortgage or 30 with the same identical rate?

3. You did not get my point. When you save X from your mortgage interest it is EXACTLY like getting a raise of X dollars, right? (Unless one does not itemize which would make it even better than such a raise.)

 

[KATX]

Originally posted by: papaschtroumpf

Originally posted by: KATX

edit: I hope some of you people who are only saving $60/mo. realize that you are re-amortizing your loan. For example, let's assume that you have monthly P&I payments of $1,000 and that you have paid on your existing 30 year loan for 24 months (2 years) already. You save $60 per month with your new loan, bringing your new payment down to $940, but you are adding 2 years back onto your loan going back to 30 years. Saving $60 per month saves you $20,160 over the next 28 years, but adding on those 24 more months of $940 will cost you $22,560 (this monthly savings that becomes a long-term loss is known as the "banker's secret"). In addition, the $60 off your monthly payment is all interest, meaning that your mortgage interest tax deduction will be $720 less in the 1st year of your mortgage alone. Assuming a low 15% tax bracket, that means you'll pay about $108 more in taxes next year.

You might want to re-think that "easy math".

Well, I agree with your math but not quite with your conclusions.

1. In your example the person can increase their payments on their own just enough to cause the mortgage to last only 28 years.

2. I do not believe this so called "banker's secret". You seem to imply that bankers prefer a 30 year mortgage over a 28 year one when both have the same interest rate. If this were true, interest rates for 30 year mortgages would have been lower than those for 15 year mortgages. But they are not.

3. Losing interest deduction when your rate goes down is like your income taxes increasing when you get a raise. But no one rejects a raise.

Also your math assumes that you're planning on staying in the house till the mortgage is paid off, which in my line of work is unlikely.

Where is that assumption? Please point it to me.

 

[PHL1365]

Bump 4/2/04

See edits in OP

 

[KATX]

Originally posted by: PHL1365
Bump 4/2/04

See edits in OP

I could not find what you meant but I had to read all your statements. Generally I agree with all your statements.

I too locked at 15 year, 4.75%, no points, no cc, , with $299 "points".

I did it with Greenlightloans.com

In one week they were at my home signing the darn thing. In another week, they "funded" my loan. But it is a week that they say the "title money" has not "come back" yet. They tell me this is a formality but I am a bit worried. Their customer service is horrible. They never return or answer calls unless they want something from you.

BTW: even before I sign the papers, they had sold/assigned my loan to WF. Their papers say that they sell more than 90% of their loan (I bet it is 100%). I also suspect that they are a front for WF.

They have.....err...correction HAD great rates.

 

[dr wily]

and just like that BLAM! the 30 year skyrockets..
looks like the land of the rising fun are no longer bailing us out of high interest rates anymore since they stopped buying bonds to keep the dollar afloat.