A couple weeks back I posted an update on our debt progress. From 11/2012 - 11/2013 we paid off almost $35,000 in debt. At this point in our lives, debt means mortgage debt either on our primary home or our three investment properties or our piece of land.
I didn't think much about that number, except I liked it because I like round numbers. But, going back through our networthiq.com numbers I realized that our debt progress in 2013 took an unusual jump (thankfully in the right direction).
11/2012 - 11/2013 - @$35,000
11/2011 - 11/2012 - @$22,000
11/2010 - 11/2011 - @$20,000
11/2009 - 11/2010 - @$19,500
11/2008 - 11/2009 - @$19,000
I'm sure you can see that from 2008-2012 there was a gradual and upward trend on the amount of debt we killed each year. And then, all of sudden, whammo, this year a thirteen thousand increase. Even putting aside the mortgage principal prepayment goal of $5,000 (which was also a goal last year and the year before), I am surprised by this dramatic forward progress. I'm going to have to further investigate the numbers, but I'm assuming this year's dramatic advance is as a result of our primary home refinance, which closed last quarter of 2012, in which we shortened our term and got a reduced rate of 2.75%.
Showing posts with label REFI. Show all posts
Showing posts with label REFI. Show all posts
Thursday, November 21, 2013
Wednesday, September 18, 2013
2008 - 2013 The Great Recession Check Up - Part III
Okay, so far we are one and one. While we are doing well on our savings/retirement plan, see Part II, our occupation based salary is flat/slightly down after five years, see Part I.
Real Estate
First the good news, we are making decent progress in paying down our primary mortgage. Last year we refinanced into a 15 year term with a 2.75% interest rate which will save us (between the reduced term and the reduced interest) $180,000 over the life of the mortgage.
The other good news we have is that all three of rental properties are rented and paying for themselves.
So, now the bad news. We live in South Florida and our rental properties are located in South Florida and if you know anything about the real estate bubble you know South Florida got hit hard.
In 2008 our primary home was valued at $465,000. At present I have the value at $399,000 which is based on the very thorough appraisal we had done last year as part of our refinance.
In 2008, our three rental properties and our vacant land were valued at a total of $823,920. At present, I have our investment properties valued at a total of $606,350.
So, in total, over five years we have lost, in equity, $283,550. Actual lost equity is likely even higher in that I have no idea if we could sell any of our properties for the current value.
Real Estate
First the good news, we are making decent progress in paying down our primary mortgage. Last year we refinanced into a 15 year term with a 2.75% interest rate which will save us (between the reduced term and the reduced interest) $180,000 over the life of the mortgage.
The other good news we have is that all three of rental properties are rented and paying for themselves.
So, now the bad news. We live in South Florida and our rental properties are located in South Florida and if you know anything about the real estate bubble you know South Florida got hit hard.
In 2008 our primary home was valued at $465,000. At present I have the value at $399,000 which is based on the very thorough appraisal we had done last year as part of our refinance.
In 2008, our three rental properties and our vacant land were valued at a total of $823,920. At present, I have our investment properties valued at a total of $606,350.
So, in total, over five years we have lost, in equity, $283,550. Actual lost equity is likely even higher in that I have no idea if we could sell any of our properties for the current value.
Thursday, August 15, 2013
Refinance of Rental # 3
Gosh, I am so glad we got refinanced our primary home last year (into a 15 year loan at 2.75% rate) before Mr. Sam was laid off from his job. Since we knew that the lay off was likely coming that was one of the reasons we pushed to get that REFI done, obviously better to have two stable salaries to show the bank.
Yesterday, I turned my attention to Rental #3 which is the only property/loan that we have not refinanced. And I did so because the mortgage company keeps sending my notices that this property qualifies for the HARP program or some other program and that they can do a cheap and quick REFI for us. While we need to refinance this property since this is our only non-conventional loan, its on an ARM that resets on an annual basis, it really has not made sense to do so because (1) the current rate is 3.125% and (2) I really don't think it qualifies for a REFI.
I had a lovely chat, seriously, with a mortgage broker at my current loan servicing company. She indicated that in fact the property is eligible regardless of the fact that it is not a primary dwelling. It is eligible because its backed by Fannie Mae, it originated prior to 6/1/09, no late payments in the last year (no late payments ever) and we haven't used the HARP program before on this loan.
But, the rates she could offer me for an investment property were in the 5% range. And, further we would likely be forced to refinance into another 30 year term, even though we would prefer a 15 year term, because under the HARP program the REFI cannot increase the mortgage payment by more than 20%. It makes no sense to me to impose a 20% limit on an investment property when we have several good years of rental income well above that level.
As for the LTV ratio they keep citing in the advertisements, she indicated that is simply based on the original loan amount and the amount we currently owe. She further agreed that the LTV ration quoted in the documents likely has nothing to do with appraisal value (I seriously doubt this home would appraise for what we currently owe). But, even if we are underwater we can still REFI.
Right now it really doesn't make sense to refinance this property, but I'm going to start watching rates again. I'd like to lock in a rate under 5% with a decent term before the ARM adjusts above that level.
Yesterday, I turned my attention to Rental #3 which is the only property/loan that we have not refinanced. And I did so because the mortgage company keeps sending my notices that this property qualifies for the HARP program or some other program and that they can do a cheap and quick REFI for us. While we need to refinance this property since this is our only non-conventional loan, its on an ARM that resets on an annual basis, it really has not made sense to do so because (1) the current rate is 3.125% and (2) I really don't think it qualifies for a REFI.
I had a lovely chat, seriously, with a mortgage broker at my current loan servicing company. She indicated that in fact the property is eligible regardless of the fact that it is not a primary dwelling. It is eligible because its backed by Fannie Mae, it originated prior to 6/1/09, no late payments in the last year (no late payments ever) and we haven't used the HARP program before on this loan.
But, the rates she could offer me for an investment property were in the 5% range. And, further we would likely be forced to refinance into another 30 year term, even though we would prefer a 15 year term, because under the HARP program the REFI cannot increase the mortgage payment by more than 20%. It makes no sense to me to impose a 20% limit on an investment property when we have several good years of rental income well above that level.
As for the LTV ratio they keep citing in the advertisements, she indicated that is simply based on the original loan amount and the amount we currently owe. She further agreed that the LTV ration quoted in the documents likely has nothing to do with appraisal value (I seriously doubt this home would appraise for what we currently owe). But, even if we are underwater we can still REFI.
Right now it really doesn't make sense to refinance this property, but I'm going to start watching rates again. I'd like to lock in a rate under 5% with a decent term before the ARM adjusts above that level.
Thursday, December 6, 2012
Mortgage Musings
Now that we are a few months into our new loan term it is time for me to start dreaming about killing the mortgage again.
As a reminder, our new loan term is 15 years (or 180 months) and our new rate is 2.75% fixed. Post-refinance, our monthly mortgage payment actually went up, although our rate went way down, about a $100 because we shortened the loan term by 6 years. Our current monthly loan payment is more than 60% principal payment, so we are already making good progress at chipping away on our principal.
If we continue to pay an extra $415 a month towards principal, which is what we have been doing the last couple of years, we will shorten our loan period by 40 months or 3+ years. We actually don't save that much in interest by prepaying on our loan because our current interest rate is so low. If we keep to this prepayment schedule of an extra $415 a month, we will save $13,500 in interest.
If we increased our prepayment to $830 a month (doubling what we are prepaying now) we will shorten the loan period by 65 months or almost 5 and a half years. Meaning that we would have the mortgage on our primary home paid off in under 10 years. Doing so would mean saving $21,800 in interest.
Having our mortgage paid off in under10 years is very appealing, but we'll have to balance that against whether it makes mathematical sense to do so and the priority of other goals.
As a reminder, our new loan term is 15 years (or 180 months) and our new rate is 2.75% fixed. Post-refinance, our monthly mortgage payment actually went up, although our rate went way down, about a $100 because we shortened the loan term by 6 years. Our current monthly loan payment is more than 60% principal payment, so we are already making good progress at chipping away on our principal.
If we continue to pay an extra $415 a month towards principal, which is what we have been doing the last couple of years, we will shorten our loan period by 40 months or 3+ years. We actually don't save that much in interest by prepaying on our loan because our current interest rate is so low. If we keep to this prepayment schedule of an extra $415 a month, we will save $13,500 in interest.
If we increased our prepayment to $830 a month (doubling what we are prepaying now) we will shorten the loan period by 65 months or almost 5 and a half years. Meaning that we would have the mortgage on our primary home paid off in under 10 years. Doing so would mean saving $21,800 in interest.
Having our mortgage paid off in under10 years is very appealing, but we'll have to balance that against whether it makes mathematical sense to do so and the priority of other goals.
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