Elessar78 Posted May 10, 2016 Share Posted May 10, 2016 Not bad. Just make sure you diversify properly. There's no compensation for single drug lord risk. I'd recommend a low cost, passively managed fund that tracks the DEA's drug cartel 100 index. My sister-in-law could passively-aggressively manage a fund. Link to comment Share on other sites More sharing options...
Corcaigh Posted May 10, 2016 Share Posted May 10, 2016 Yeah, yeah. I just want it noted for the record that the initial request was for a relatively safe investment that pays more than just sitting in the bank. In this low interest environment, that's not as easily done as typed. Ordinarily, I wouldn't have brought it up, but it's one of the ways to do it. Paying off your mortgage gives you a risk-free, guaranteed "return" that is higher than you will get from a savings account or CD. Link to comment Share on other sites More sharing options...
PleaseBlitz Posted May 10, 2016 Share Posted May 10, 2016 Paying off your mortgage gives you a risk-free, guaranteed "return" that is higher than you will get from a savings account or CD. Explain. Link to comment Share on other sites More sharing options...
Corcaigh Posted May 10, 2016 Share Posted May 10, 2016 Explain. Future income not going to mortgage interest payments. Link to comment Share on other sites More sharing options...
zoony Posted May 10, 2016 Share Posted May 10, 2016 Future income not going to mortgage interest payments. Frees up cash for potatoes and whiskey Ultimately this is a question of time frame. Yes, there will be another housing bubble at some point. Is it in 10 years? I doubt it. 20? Maybe. It just gets more and more likely as your time frame lengthens. When it does happen, it almost certainly won't be as bad as the last one because a lot of the demand has been taken out of the market (i.e., no doc loans, which aren't legal anymore). Of course, a lot can change, including the law, over a decade or several. Disagree. The law right now just says that "lenders must make a reasonable and good-faith determination that a borrower has the ability to repay a loan." (See link i posted above). I don't really think that is too high a bar. I don't disagree there should be standards but I also know that regulations have gone too far The bubbles are just popping up elsewhere. Like new car loans, for instance Link to comment Share on other sites More sharing options...
PleaseBlitz Posted May 10, 2016 Share Posted May 10, 2016 Future income not going to mortgage interest payments. I guess if by "paying off your mortgage" you meant "not having a mortgage" then i agree. Problem is you have to pay it off in current dollars at the expense of all other possible investments. Frees up cash for potatoes and whiskey I don't disagree there should be standards but I also know that regulations have gone too far The bubbles are just popping up elsewhere. Like new car loans, for instance I work in mortgage law for a living, and I really don't think "you should check to see if your borrower can actually repay the loan" is going too far. That is literally the standard. Here's the rule: The final rule describes certain minimum requirements for creditors making ability-to-repay determinations, but does not dictate that they follow particular underwriting models. At a minimum, creditors generally must consider eight underwriting factors: (1) current or reasonably expected income or assets; (2) current employment status; (3) the monthly payment on the covered transaction; (4) the monthly payment on any simultaneous loan; (5) the monthly payment for mortgage-related obligations; (6) current debt obligations, alimony, and child support; (7) the monthly debt-to-income ratio or residual income; and (8) credit history. http://files.consumerfinance.gov/f/201301_cfpb_final-rule_ability-to-repay.pdf (the above is on page 3 ... of 804 pages) So, in laymen's terms, lenders must "consider" 8 things, the borrowers income, whether they actually have job, the payments on the loan, including a second trust and the escrow, the borrowers other debts, LTV and credit score. Seems pretty ****ing reasonable, especially when by "consider" it just means that lenders have to look at it, but the rule sets no actual standards that must be followed. If the borrower says, "i make $10,000 a year" then you've "considered" their income. 480 credit score? Fine, it's been considered, lenders can still make the loan if they want. Link to comment Share on other sites More sharing options...
Corcaigh Posted May 10, 2016 Share Posted May 10, 2016 Frees up cash for potatoes and whiskey What's your point? Potatoes and whiskey bought with money that used to be squandered on a mortgage taste of freedom. Link to comment Share on other sites More sharing options...
zoony Posted May 10, 2016 Share Posted May 10, 2016 What's your point? . Well you are Irish you see. So it's either that or Lucky Charms jokes. All of which are dumb but I feel obligated every time you post. Sorry Link to comment Share on other sites More sharing options...
Corcaigh Posted May 10, 2016 Share Posted May 10, 2016 Well you are Irish you see. So it's either that or Lucky Charms jokes. All of which are dumb but I feel obligated every time you post. Sorry You seem to be suggesting that whiskey and potatoes were questionable investments. I think I'll invest in another bottle of Redbreast on the way home tonight. It's for special occasions such as a Tuesday night after work. Link to comment Share on other sites More sharing options...
chipwhich Posted May 11, 2016 Share Posted May 11, 2016 Do any of you think we are heading into another housing bubble? Why/why not? If the interest rates were ever to rise and the Fed not hold them down, you can bet your ass there will be a bubble. Don't overextend yourself. People don't buy houses anymore based on affordability, its strictly on the payment. Payments are low now. Rising rates means payments get high. When you dance in the land of higher priced housing you dance at risk. Link to comment Share on other sites More sharing options...
skinfan2k Posted May 11, 2016 Share Posted May 11, 2016 can someone clear up some confusion? Did i make a mistake on my recent home purchase? I did a 30 year mortgage at 3.87 back in Oct with 20% down. Everyone is telling me i should have done a FHA loan so i would only put 5% down and get a lower interest. Which one is better? Link to comment Share on other sites More sharing options...
techboy Posted May 11, 2016 Share Posted May 11, 2016 Depends on all the terms of both but 3.87 is insanely low historically, so I wouldn't lose any sleep over it. Just count yourself lucky that money was so cheap. Link to comment Share on other sites More sharing options...
skinfan2k Posted May 11, 2016 Share Posted May 11, 2016 Depends on all the terms of both but 3.87 is insanely low historically, so I wouldn't lose any sleep over it. Just count yourself lucky that money was so cheap. 0 pts too. Link to comment Share on other sites More sharing options...
chipwhich Posted May 11, 2016 Share Posted May 11, 2016 What Techboy said. Plus your FHA loan would have required you to pay PMI which would have cost you more. You made the right choice. Link to comment Share on other sites More sharing options...
skinfan2k Posted May 11, 2016 Share Posted May 11, 2016 What Techboy said. Plus your FHA loan would have required you to pay PMI which would have cost you more. You made the right choice. oh yeah so whats the benefit of a FHA loan then???? just lower down payment??? Link to comment Share on other sites More sharing options...
chipwhich Posted May 11, 2016 Share Posted May 11, 2016 oh yeah so whats the benefit of a FHA loan then???? just lower down payment??? Yeah because your friends are too broke to have 20% down. Link to comment Share on other sites More sharing options...
GoSkins0721 Posted May 12, 2016 Share Posted May 12, 2016 For anyone living in Virginia or NC, Capcenter has $0 closing cost mortgages & refi's. The rate is a bit higher but there are no out of pocket costs to close. Current 30 year is 3.75% & 15 year is 3.125%. I used them to change my loan from 30 year to 15 year. Link to comment Share on other sites More sharing options...
PleaseBlitz Posted May 12, 2016 Share Posted May 12, 2016 The minimum downpayment on an FHA loan is 3.5%, not 5%. You also have to pay both upfront mortgage insurance (UFMIP) and monthly mortgage insurance, which adds significantly to your payment. Generally, conventional is the way to go. What are generally considered the advantages of FHA are 1) the very low downpayment and 2) the qualifying standards are lower than conventional (meaning, you can qualify with a 580 credit score or a higher debt to income ratio). For anyone living in Virginia or NC, Capcenter has $0 closing cost mortgages & refi's. The rate is a bit higher but there are no out of pocket costs to close. Current 30 year is 3.75% & 15 year is 3.125%. I used them to change my loan from 30 year to 15 year. Everyone does this. Lenders price loans based on what they can sell them for in the secondary market. A loan that is 1/4 above par (the average rate with no points or refund) is worth several thousand dollars more to the lender, so they just use that to pay for your closing costs. That being said, if you have no issue with the higher payment on the 15 year, your rate probably went down significantly, so it was a good move. Link to comment Share on other sites More sharing options...
tshile Posted May 12, 2016 Share Posted May 12, 2016 For anyone living in Virginia or NC, Capcenter has $0 closing cost mortgages & refi's. The rate is a bit higher but there are no out of pocket costs to close. Current 30 year is 3.75% & 15 year is 3.125%. I used them to change my loan from 30 year to 15 year. Interesting... i've been avoiding refying from my current rate because the cost of the refi didn't make up for the decrease in rate because I'm planning on selling within 2 years. this might make sense though. Link to comment Share on other sites More sharing options...
Bonez3 Posted May 13, 2016 Share Posted May 13, 2016 The minimum downpayment on an FHA loan is 3.5%, not 5%. You also have to pay both upfront mortgage insurance (UFMIP) and monthly mortgage insurance, which adds significantly to your payment. Generally, conventional is the way to go. What are generally considered the advantages of FHA are 1) the very low downpayment and 2) the qualifying standards are lower than conventional (meaning, you can qualify with a 580 credit score or a higher debt to income ratio). Everyone does this. Lenders price loans based on what they can sell them for in the secondary market. A loan that is 1/4 above par (the average rate with no points or refund) is worth several thousand dollars more to the lender, so they just use that to pay for your closing costs. That being said, if you have no issue with the higher payment on the 15 year, your rate probably went down significantly, so it was a good move. What do you mean 'everyone is doing this'? I am currently dealing with a bank and Loan Depot, neither offered this. I'm in NJ. I'm about to pull trigger on 30 year at 3.65 with cash out. I'm about 4 years into current 30 yr. If I pay same amount as prior mortgage the difference is about 6 month difference in payoff period, thus the cash out is a wash and cash in account. Should I push for no closing???? Link to comment Share on other sites More sharing options...
PleaseBlitz Posted May 13, 2016 Share Posted May 13, 2016 What do you mean 'everyone is doing this'? I am currently dealing with a bank and Loan Depot, neither offered this. I'm in NJ. I'm about to pull trigger on 30 year at 3.65 with cash out. I'm about 4 years into current 30 yr. If I pay same amount as prior mortgage the difference is about 6 month difference in payoff period, thus the cash out is a wash and cash in account. Should I push for no closing???? I mean that any loan officer can price a loan in such a way as to pay for most or all of your closing costs. I used to do it all the time when I was in the business. Maybe not a brick-and-mortar bank because the folks there generally have no power. Basically, if you push for no closing, they'll say fine but you'll get a higher rate to pay for the closing costs. How many lenders have you talked to? The more the better. I "have a guy" for mortgages (former co-worker), but i have used LendingTree with good success for car loans. Just be prepared to deal with a whole bunch of phonecalls if you do it. Link to comment Share on other sites More sharing options...
techboy Posted May 13, 2016 Share Posted May 13, 2016 What do you mean 'everyone is doing this'? Basically, most lenders (especially the internet lenders with the best rates) have no intention of actually servicing your mortgage. They don't have the resources or interest (ha! interest! get it! Because... never mind) in doing so. Once you close, they turn around and bundle your loan with a bunch of others, and sell them to a bigger financial institution that WILL service it. I've had refinances sold to Wells Fargo and Bank of America, for example. These bigger lenders then make money on collecting your interest. Here's a simplified example with made up numbers: You borrow $100,000 at 3.75% for 30 years from a small lender. That $100,000 loan might be worth $120,000 to BOA, because they'll collect way more than $20,000 in interest over 30 years (They might collect a lot less and even lose money if you refinance or pay off early, but they can spread that risk over a lot of loans because they have a lot of money... another reason small lenders don't play this game). So the small lender sells the loan as part of a package to BOA, makes a $20,000 profit, and goes right back and finds another customer to make another loan. That's not enough for them to cover your closing costs, though, so you pay them. That $100,000 loan might be worth $130,000 at 4%, though, so if you agree to pay the extra interest, your small lender will happily agree to cover the $6,000 in closing costs, because they make an extra $4000 even after that. It's not necessarily a bad idea... if you think you might be moving before the break even point of the closing costs vs savings, or if you believe that you're in a falling interest rate environment and you might want to refinance again soon, getting no closing costs via a lender credit can make a lot of sense. I know of a lot of people that refinanced over and over during the last 5 years as interest rates kept falling, and that wouldn't have worked if they had to pay closing costs every time. They gave up that last quarter percent or so whenever the rates bottom out, but ensure that they at least get close. Link to comment Share on other sites More sharing options...
PleaseBlitz Posted May 13, 2016 Share Posted May 13, 2016 Basically, most lenders (especially the internet lenders with the best rates) have no intention of actually servicing your mortgage. They don't have the resources or interest (ha! interest! get it! Because... never mind) in doing so. Once you close, they turn around and bundle your loan with a bunch of others, and sell them to a bigger financial institution that WILL service it. I've had refinances sold to Wells Fargo and Bank of America, for example. These bigger lenders then make money on collecting your interest. Servicing rights (MSRs) are usually sold independently from the mortgage itself. So, the financial institutions that "own" the loans and the servicer are often not the same entity. Link to comment Share on other sites More sharing options...
PleaseBlitz Posted May 13, 2016 Share Posted May 13, 2016 I'll just tag a bit more onto that last post of mine in case any one cares. The entity that you probably think "owns" your loan is either you servicer or a subservicer. They probably don't "own" the loan itself, they just get paid to perform all of the servicing stuff required by Regulation X. If you want to find out who "owns" your loan, you can find out on the MERS Registry (Mortgage Electronic Registration System). Go here: https://www.mers-servicerid.org/sis/index.jsp Type in your address and it will spit out your master servicer (who may or not be who you send your money to each month). To find out who owns your loan, there is a link that says: "If you are a borrower on this loan, you can click here to enter additional information and display the Investor name." The investor is who owns your loan. It's probably Fannie or Freddie. Link to comment Share on other sites More sharing options...
Bonez3 Posted May 13, 2016 Share Posted May 13, 2016 The loan depot stated they service the loan, unlike Quicken which will likely sell to Wells Fargo, BOA, etc. Should I still fight for zero or reduced closing costs Link to comment Share on other sites More sharing options...
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