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educate me 401-k

  1. #2176
    Super Moderator OreoGaborio's Avatar
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    Re: educate me 401-k


    Quote Originally Posted by JettaJayGLS View Post
    Just got off the phone with Mortgage broker. Right now I am 4.25%, 25ish years left of 30 year. It is not owner occupied, but it could be if I wanted to move back home (doable, but definitely hoops to jump through)

    I can refi as an investment property @ 3.1% with a quarter point ($1k) or @ 2.875% with a full point ($4k). 15 year rates for investment properties are only 10bps lower.
    If I pull off owner occupied, rates were 2.2% for 15 year or 2.5% for 30 year. I would go 15 year and keep just about the same monthly.

    I'm leaning towards the 30 year investment with a full point for a few reasons:
    1) It is the most honest and most convenient.
    2) I don't imagine Boston rental market dropping below my monthly payment, which de-risks this significantly
    3) It is not worth the extra risk for 10bps, I can always pay more each month.
    5) Vacant months become very very very manageable. I currently tuck away that amount in savings each paycheck.
    6) Buying the full point does not make sense from a financial point of view - I can invest the cash and make more. The thing is...will I actually do that?

    Does this pass the NESR sniff test?
    I think the answer is clear.... MOVE BACK HOME!

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  2. #2177
    Your Father csmutty's Avatar
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    Re: educate me 401-k

    Fuck. This is sounding like I should refi.

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  3. #2178
    Backwoods lobster boy number9's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by csmutty View Post
    Fuck. This is sounding like I should refi.
    What's your rate currently?

    There is honestly not much farther that rates can drop. Eeven if the Fed drops interest rates to zero you won't see mortgage rates go down that far, as there is still non-zero cost and risk involved.

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  4. #2179
    TWINS! xrocket21's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by number9 View Post
    What's your rate currently?

    There is honestly not much farther that rates can drop. Eeven if the Fed drops interest rates to zero you won't see mortgage rates go down that far, as there is still non-zero cost and risk involved.
    Thats what we thought at 2.75... then it dropped to almost 2!

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  5. #2180
    Your Father csmutty's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by number9 View Post
    What's your rate currently?

    There is honestly not much farther that rates can drop. Eeven if the Fed drops interest rates to zero you won't see mortgage rates go down that far, as there is still non-zero cost and risk involved.
    3.375

    It wasn't worth it before but it might be worth it now. I'll talk to someone tomorrow.

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  6. #2181
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    Ally savings is now at 0.60% APY. Just great.

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  7. #2182
    Fast is contagious JettaJayGLS's Avatar
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    Re: educate me 401-k

    So I'm going owner occupied.

    Okay, so I got more comfortable saying owner-occupied and had them go forward with rates at 15 year and 30 year.

    30 year @ 2.625% drops P&I by ~30%, adding 5 years. It makes my monthly WAY below market rates.
    15 year @ 2.25% increases P&I by ~20%, reducing 10 years. Monthly is still below market rent, but who knows pending how COVID changes.

    At these rates, I feel like the 30-year may be the better option to reduce risk, especially if we want to live on both coasts and travel.
    From a personal perspective, getting into a 15 year loan at 2.25% also sounds really, really attractive. If I knew I were staying put, it would be a no brainer.

    Any thoughts?

    I'm leaning 30 year. 2.625% is ridiculous. If I look back on it, I don't think I could ever be upset with that.

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  8. #2183
    Lifer jasnmar's Avatar
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    Re: educate me 401-k

    2.625 is an amazaballs rate according to any mortgage rate I've ever paid in my life.

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  9. #2184
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    Do the spreadsheet. Compare. You know how.

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  10. #2185
    Lifer Chippertheripper's Avatar
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    Re: educate me 401-k

    If it were me, I’d go 30 and pay extra when I could, sock lots more for the inevitable bad tenant, and if I never had one of those, just pay the balance off when I had enough put aside, no matter where I was.
    But I am not a risk taker in any way with real estate and large sums of money.

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  11. #2186
    Backwoods lobster boy number9's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by Chippertheripper View Post
    If it were me, I’d go 30 and pay extra when I could, sock lots more for the inevitable bad tenant, and if I never had one of those, just pay the balance off when I had enough put aside, no matter where I was.
    But I am not a risk taker in any way with real estate and large sums of money.
    I would do this. Take the 30-year note, and set aside a couple of times a year where you pay directly into the principal.

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  12. #2187
    Fast is contagious JettaJayGLS's Avatar
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    Re: educate me 401-k

    I think I am landing in the 30 year camp. I don't imagine I'll ever look back on it and think I made a mistake with either...unless shit hits the fan, I lose my job, and now I'm stuck with a mega payment and underwater on the house. So 30 year seems more safe and from a financial perspective, not the worse decision. The 15 year would just be a feel good thing.

    Per Colin, I don't really plan to pay it down early either. No real reason too at those rates. I'm not sure I'll ever have a chance to borrow at a rate that low again in my life.

    Thank you folks.

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  13. #2188
    Lifer gixxer72's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by JettaJayGLS View Post
    I think I am landing in the 30 year camp. I don't imagine I'll ever look back on it and think I made a mistake with either...unless shit hits the fan, I lose my job, and now I'm stuck with a mega payment and underwater on the house. So 30 year seems more safe and from a financial perspective, not the worse decision. The 15 year would just be a feel good thing.

    Per Colin, I don't really plan to pay it down early either. No real reason too at those rates. I'm not sure I'll ever have a chance to borrow at a rate that low again in my life.

    Thank you folks.
    Sound logic. We took on a fairly stout mortgage 1.5 years ago 5% for 30. A year later we refi’d to a 15 at just over 3%. Monthly did go up a fair bit, but total interest paid on the note took a massive reduction and we had the comfort level to absorb the monthly. Starting with 30 at these low rates makes total sense, if you are comfortable later and rates stay low you can always convert to a shorter term. Good luck with your buy!

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