I refi’d in 2013 at 2.87% for 15yr. Balance today is $100k. I was looking at another 15yr since it had the lowest interest I found around 2.60
If you have 8 years left at 2.87, I would not refi for 15 years at 2.6.
That’s a great position to be in!
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A home owned free and clear (or with significant equity) isn’t really that illiquid.
I could log into Chase.com right now and transfer several years worth of expenses from a HELOC into checking.
Edit: the rate on the HELOC as of my last statement is 3.13%.
@Bostoncarconcierge Yea the math wasn’t looking to be in my favor. I looked into the 5yr ones but the rates were higher.
I always shop via interest being paid and didn’t read anything about it on this thread so was curious if it even gets considered.
I feel it gets overlooked when people refi but maybe it’s just me.
I think this conversation has been interesting and fruitful!
Understand that you van always “apply” for HELOC and cash out but still you’d have to pay interest (usually higher than your mortgage rate) to borrow the cash you could have had it in bank.
Not to consider the lower monthly “commitment” (15 vs 30) if you ever needed the financial flexibility to do something else.
But you could put those heloc funds to work for you. Im not going to share strategies here because it could get people into trouble, But i have financial friends that trade with heloc accounts at 2.6 and get returns of 16-18% in the market.
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There isnt enough interest savings to consider this.
Unless you’re looking to lower payments which can have other benefits…no need to extend the mortgage term.
Don’t they call that arbitrage… hehe
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I call it robbery lol…There all foaming at the mouth and extremely low borrowing rates and a market about to drop again.
But my point is that you would have those funds available to you without paying additional interest or applying for heloc. And if youre property increases in value you’ll always be able to access additional heloc if need be.
Just comparing putting extra cash in paying towards a mortgage (specially in this low interest environment)
That’s what I figured when I was running my numbers. Doesn’t make sense for me so I’ll take my win!
I cant ever sit with cash sitting in a bank account. Have 3 months life expenses in good times and 6 months in times like these and the rest should be making returns for you. Why should the bank be able to use your cash to make money while you make pennies? Even a high yield which you wont get at a “bank” is a better bet. Outside of removing PMI or paying cash for you house you should never just dump free cash into paying off your house.
My point exactly. Even right now PMI is really cheap.
But I did not want to get into adding “investment gains” on the cash “in bank” as that gets complicated as not everyone csn achieve good market gains.
Totally wrong here…not calling you out to start a fight but “everyone” can yield at minimum 8% YOY gains.
Index funds research and invest
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You’re probably right but im staying out investment advice & generalising the returns. Everyone has a different expertise & risk tolerance level which i cant speak for.
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Perhaps we define “financial flexibility” differently, which is fair.
Minus unavoidables like taxes, insurance and groceries, every penny we make is discretionary income.
And the HELOC money is pretty cheap in the remote case we ever need it (it’s more like contingency Plan L than Plan A or B). From our last statement:
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True. Can the bank reduce or revoke the heloc (in the worse case scenario)?
For the masses, we have to consider human error. You hear “if you take what you save and put it into a [name the account], you’ll get a better return”.
Most people don’t have the discipline nor put in the effort to do so. They’ll sign whatever loan, lease etc and never go about placing that additional $$ in said account.
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Lets not speak to the masses lets info share in the group here and let anyone who wants to ask questions. Some have more expertise or are currently going through a refi or purchase. Maybe investment strategy is best suited for another thread. But as @Bostoncarconcierge said this is very beneficial to members and a great learning experience.
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