3.75 vs 4.00

User Forum Topic
Submitted by Sean19 on April 22, 2016 - 7:32pm

Hello,

I was offered 2 loans at 4.00% interest rate with 5% down and closing costs + misc funds coming in at around $15,000.

I was then offered a loan at 3.75% interest rate with 3% down but closing cost and other total close to $15,000 as well.

The loan value would be ~$200,000. I can put down $10,000 no problem. I feel like this loan company is asking me to put down only $6,000 (3%) and then taking that other percent in origination fees or closing cost that is about $4,000. I feel like it would be better for me to put that towards the principal so I can get rid of mortgage insurance quicker. Any advantage to the loan at %3.75 that I am not seeing.

Submitted by Coronita on April 30, 2016 - 2:46am.

...So, as another example, using the numbers from the previous example. If the person refinanced and reapplied the $150/month payment savings as extra principal payments (IE, he made the same monthly payment as before, but now an extra $150 goes towards principal reduction), he/she would end up saving $45428 in interest charges...

So, there's so many variables one can play with...

Should I Refinance 2

Submitted by HLS on April 30, 2016 - 6:20am.

FLU,
You are a very smart guy BUT you made the calculations incredibly complicated.
HOWEVER in the above post, you nailed the holy grail
of the benefit of refinancing that 999 people out of 1000 (or probably 9999 out of 10,000) don't get.

1.Lower your rate at no cost
2.Do nothing other than make the same payment that you have been making.

In the example above, it saves you $45,428 over the life of the loan for doing nothing more than lowering your rate AND making the same payment.
PERIOD. END OF STORY. QED

If you don't keep the loan the full term, you still save money in interest every single day from the first day your refi is funded.
THERE IS NO PAYBACK PERIOD, There is no amount of time to recover (with a no cost loan)

Any spreadsheets or other convoluted way of trying to figure this out OR justify the benefit is nothing more than Intellectual activity that serves no practical purpose.

IF you choose to make a lower payment, you benefit a different way (i.e. monthly cash flow)

Most financial experts, including Suzi Orman and Dave Ramsey never understood the benefits of refinancing to a lower rate at no cost or how powerful it is or how to explain it.

***For the argumentative stooges who want to claim that there's no such thing as a no cost (FREE) loan so therefore you shouldn't even consider doing this (because if you paid more you MIGHT get more savings) and stay in a higher rate
(or because someone is going to make money for originating their loan)
I can only say that I FEEL SORRY FOR YOU.
HLS AKA "THE TROLL"

Submitted by Coronita on April 30, 2016 - 10:14am.

HLS wrote:
FLU,
You are a very smart guy BUT you made the calculations incredibly complicated.
HOWEVER in the above post, you nailed the holy grail
of the benefit of refinancing that 999 people out of 1000 (or probably 9999 out of 10,000) don't get.

1.Lower your rate at no cost
2.Do nothing other than make the same payment that you have been making.

In the example above, it saves you $45,428 over the life of the loan for doing nothing more than lowering your rate AND making the same payment.
PERIOD. END OF STORY. QED

If you don't keep the loan the full term, you still save money in interest every single day from the first day your refi is funded.
THERE IS NO PAYBACK PERIOD, There is no amount of time to recover (with a no cost loan)

Any spreadsheets or other convoluted way of trying to figure this out OR justify the benefit is nothing more than Intellectual activity that serves no practical purpose.

IF you choose to make a lower payment, you benefit a different way (i.e. monthly cash flow)

Most financial experts, including Suzi Orman and Dave Ramsey never understood the benefits of refinancing to a lower rate at no cost or how powerful it is or how to explain it.

***For the argumentative stooges who want to claim that there's no such thing as a no cost (FREE) loan so therefore you shouldn't even consider doing this (because if you paid more you MIGHT get more savings) and stay in a higher rate
(or because someone is going to make money for originating their loan)
I can only say that I FEEL SORRY FOR YOU.
HLS AKA "THE TROLL"

I got sick and tired of people talking about things without bringing real numbers and data to the table. Yes, I know this was an incredibly over abuse of math to prove a point. But sometimes that's the only way it gets through people's head.. Because it's kind of hard to argue against math. Anyway peace.

Submitted by no_such_reality on April 30, 2016 - 11:16am.

Most people don't do the sweet spot. Most people refinance and pay what the monthly statement says. In that case, your mileage may vary.

Cutting short, math follows below. All of it really boils down to has the industry change compared to 2005-2011. Is no cost, no costs. No third party fees coming out of the woodwork?

So, how much hassle for $150/month? And even with some 'costs' creeping in, $150/month can pay.

In flu's example, at 23 months, that's pretty sweet spot. You will net close to $150/month 'savings' on the refinance if you pay the lower amount going forward (for the full 30 years). In the long run, the actual mortgages costs an extra $500 over the life of the loan. $500 30 years from now, LOL.

Total payments on the first loan for 30 years being $859,347. Payments on the refinance being, $54,903 towards the first and another $804,946 towards the second (over 30 years). Net $500 more trade off for $150 extra available cash per month.

That's still a pretty deal IMHO.

If you are further in the loan, say four years, having made the first 48 payments, then refinancing and not making the increased payments will cost you $26,432 over the loan, again, monthly you pocket about $150, but the four extra years kill you.

The first loan still totals at $859,347. The first 48 payments weigh in at $114,580 and the refi-loan weighs in at $771,200 for a total payments to pay off of $885,780.

Of course, if you refi at 4 years in, keep making the prior payment, you will pay it off 'early' at month 299 of the new loan. It'll save $33,039 over the current loan.

What's $33,000 worth 25 years from now? About $17,500 assuming 2.5% inflation.

I get the lower rate will give more flexibility. I'll have a "lower" outstanding principal at any given time, after eight years it's finally $10K difference.

Submitted by no_such_reality on April 30, 2016 - 11:43am.

There may be a better way to approach the no cost discussion.

If per the prior pages, 3.75% still nets a $1700 credit to the borrower.

If the borrower is at 3.875%, when doesn't it make sense to refi to the 3.75% and take the credit?

Property taxes and insurance are two biggies, but let's assume they're funded with reserves.

Will the borrower walk out without paying anything, the same outstanding principal and $1700 in their pocket?

Submitted by Coronita on April 30, 2016 - 11:47am.

no_such_reality wrote:
Most people don't do the sweet spot. Most people refinance and pay what the monthly statement says. In that case, your mileage may vary.

Cutting short, math follows below. All of it really boils down to has the industry change compared to 2005-2011. Is no cost, no costs. No third party fees coming out of the woodwork?

So, how much hassle for $150/month? And even with some 'costs' creeping in, $150/month can pay.

In flu's example, at 23 months, that's pretty sweet spot. You will net close to $150/month 'savings' on the refinance if you pay the lower amount going forward (for the full 30 years). In the long run, the actual mortgages costs an extra $500 over the life of the loan. $500 30 years from now, LOL.

Total payments on the first loan for 30 years being $859,347. Payments on the refinance being, $54,903 towards the first and another $804,946 towards the second (over 30 years). Net $500 more trade off for $150 extra available cash per month.

That's still a pretty deal IMHO.

If you are further in the loan, say four years, having made the first 48 payments, then refinancing and not making the increased payments will cost you $26,432 over the loan, again, monthly you pocket about $150, but the four extra years kill you.

The first loan still totals at $859,347. The first 48 payments weigh in at $114,580 and the refi-loan weighs in at $771,200 for a total payments to pay off of $885,780.

Of course, if you refi at 4 years in, keep making the prior payment, you will pay it off 'early' at month 299 of the new loan. It'll save $33,039 over the current loan.

What's $33,000 worth 25 years from now? About $17,500 assuming 2.5% inflation.

I get the lower rate will give more flexibility. I'll have a "lower" outstanding principal at any given time, after eight years it's finally $10K difference.

Your missing the point of the $150/month extra you have. That $150/month is also compounded over 30 years. So whether you choose to use that $150/month to pay down your mortgage, or if you are really as good as an investor as people claim to be, you can try to arbitrage that $150/month on something with a higher return.

The extra "hassle" would be doing another application. And I'm not sure why people think $150/month over 30 years is "not worth the hassle"... A lot of people who run rentals would kill to have an extra $150/month positive cash flow...

$150/month is some people's car lease or car loan. If you don't think saving $150/month or cutting $45k off a 30 year loan, than you must be rich, and you don't need a loan to begin with.

And keep in mind this is only with a 1/4 point difference, and no rebates from the bank. The banks were on top of that throwing $5-6k bonus in some cases, and in certain cases, I was able to refinance with more than a 1/4 point drop within 22 months.

Submitted by no_such_reality on April 30, 2016 - 11:48am.

I think $150/month is worth some hassle. $150/month adds up.

Especially when you take $150 on the mortgage, another $150 on the TV/internet/phone. Another $150 one your mobile plans.

Pretty soon you're talking real money for hassle every other year on each.

Submitted by Coronita on April 30, 2016 - 11:51am.

no_such_reality wrote:
I think $150/month is worth some hassle. $150/month adds up.

Especially when you take $150 on the mortgage, another $150 on the TV/internet/phone. Another $150 one your mobile plans.

Pretty soon you're talking real money for hassle every other year on each.

Well, that's also my point... I see so many times people trying to switch cell phone,cable, insurance providers to save what 20-30/month? Or me, that tries to open and close a bank account and get that bonus $500 sign on for owning and closing an account. Or others that try to use those 0% balance transfer offers...Now those are a PITA.

Submitted by ltsddd on April 30, 2016 - 6:56pm.

.

Submitted by harvey on April 30, 2016 - 7:39pm.

gzz wrote:
So it is not free money, rather you won a number of bets with banks. That's great.

Yup.

Quote:
It wasn't free because we took on risk to do so.

Nailed it.

Submitted by harvey on April 30, 2016 - 8:23pm.

flu wrote:
And since I'm not a finance major, this might not be correct).

I am a finance major, and your spreadsheet is incorrect.

Quote:
less total interest to pay

And that's where it is flawed. Future cash flows must be discounted.

Total interest paid is an utterly useless value when evaluating debt instruments. A refi that drops you rate by 0.25% is not worth anywhere near $45K in today's dollars.

The banks have done the math. You cannot outsmart them, the best you can do is understand the alternatives.

But there's a more commonsense argument: Why would anyone pay you to buy their product?

HLS argues that if one can lower their rate with a no cost loan then it's a no brainer to refinance. And this claim is absolutely correct. When rates are so far below your current rate that banks can offer "no cost" loans, then it absolutely is possible to lower a monthly payment at no cost other than some time and effort. There's no debate there, but if HLS wants to keep insulting his imaginary opponents then carry on...

For the piggs who like to optimize their finances, the interesting question is whether a "no cost" loan is your best alternative in the situation where interest rates have fallen. Of course answer depends one's personal situation. But in general if you expect to keep a property for more than a few years the long term benefit will be greater if you pay up front for a lower rate. (And yes the numbers are different if rates go down in the future, but nobody here can predict interest rate movements even if they have had a few good rolls of the dice in the past...)

Mortgage brokers peddle no cost loans because they are an easy sell. And they do have value when rates have fallen. But there may be even better alternatives.

Submitted by no_such_reality on April 30, 2016 - 9:03pm.

If we look at the comsumer bureau sample docs. http://files.consumerfinance.gov/f/20140...

For that $400K no cost loan @ 3.75% with $1700 credit.

Is the $1700 credit a page 2 section A negative point? Net amount of a negative point and waived/lender paid fees in section A? B? C?

Is it the net remaining on D?

Does it cover E?

Is it the entry on J?

Pretty much A, B, C, & E are costs, IMHO. So when it's no cost these are all netted out and $1700 coming back?

F&G are prepaid expenses for things you already are paying

so what are we looking like?

Submitted by Coronita on April 30, 2016 - 9:34pm.

harvey wrote:
flu wrote:
And since I'm not a finance major, this might not be correct).

I am a finance major, and your spreadsheet is incorrect.

Quote:
less total interest to pay

And that's where it is flawed. Future cash flows must be discounted.

Total interest paid is an utterly useless value when evaluating debt instruments. A refi that drops you rate by 0.25% is not worth anywhere near $45K in today's dollars.

The banks have done the math. You cannot outsmart them, the best you can do is understand the alternatives.

But there's a more commonsense argument: Why would anyone pay you to buy their product?

HLS argues that if one can lower their rate with a no cost loan then it's a no brainer to refinance. And this claim is absolutely correct. When rates are so far below your current rate that banks can offer "no cost" loans, then it absolutely is possible to lower a monthly payment at no cost other than some time and effort. There's no debate there, but if HLS wants to keep insulting his imaginary opponents then carry on...

For the piggs who like to optimize their finances, the interesting question is whether a "no cost" loan is your best alternative in the situation where interest rates have fallen. Of course answer depends one's personal situation. But in general if you expect to keep a property for more than a few years the long term benefit will be greater if you pay up front for a lower rate. (And yes the numbers are different if rates go down in the future, but nobody here can predict interest rate movements even if they have had a few good rolls of the dice in the past...)

Mortgage brokers peddle no cost loans because they are an easy sell. And they do have value when rates have fallen. But there may be even better alternatives.

So you claim to be a finance major. Ok. Well let's see then.. You mention the spreadsheet is wrong. I'd like you to fix it so we are on the same page.

Seriously, I am not calling you out because I am calling you out. I am curious just exactly what you are talking about. On page two of this thread, you can download the spreadsheet. Make changes to this, and then re upload it.

If your really are a finance major that can optimize this to a tee, let's see it.

Until you really use real numbers no one is going to believe your claim because you haven't shown what you claim.

Let's.cut the bullshit crap and show me real numbers.

And this is the part that you said, that I don't quite get

Quote:

Total interest paid is an utterly useless value when evaluating debt instruments. A refi that drops you rate by 0.25% is not worth anywhere near $45K in today's dollars.

Why is this useless, it seems like you are arguing in a circular way, because just a few threads ago you mentioned that refinancing adds more to your interest balance.

No one says say anything about present value of the $45k. But now that you mention it. If you want to consider present value, then wouldn't you also need to consider the $150/month savings in refinancing. Afterall, the $150 you save in today's dollars is certainly worth more than now than in the future?

Again, why don't you modify the the spreedsheet with real numbers so we can see what you are talking about.

Submitted by FlyerInHi on April 30, 2016 - 11:41pm.

I just read this thread quickly.
Harvey is right, you have to evaluate the NPV of different alternatives based on the info you have today. That means is you want to keep the house/loan for a number of years it makes sense to buy down the rate. The loan with cost might be a better alternative.

One thing I remember about finance is that we assume that capital is unlimited or readily available, so we should choose the investment with the highest NPV. Problem is most people don't have the cash to select the best alternative.

Submitted by an on May 1, 2016 - 1:07am.

gzz wrote:
Well you are actually gambling that rates will stay low or keep going down.

If you lose, you pay more for the life of the loan. If rates go back to the 4% range and you intend on keeping the house for a long time, the extra .125 will be about $125 a year in interest payments per $100,000, gradually decreasing as the balance gets paid down. But on a typical San Diego house, about $12,000 over the life of the loan.

So it is not free money, rather you won a number of bets with banks. That's great.

The process of doing the refi also results in a credit inquiry and a lot of time and hassle, though that depends on how complicated your finances are and whether you are self employed or not. I am, and it makes the mortgage process more complicated.

I'd need at least $1000 gain before I'd deal with all that, maybe $2000. Personally, if I want to bet rates will go down, there are easier ways of doing so with bond funds and ETFs.

In summary, the cash you picked up from banks doing serial refinances are no more free money than the money I made this year with some good stock investments. In both cases we made money with correct predictions about markets. It wasn't free because we took on risk to do so.


You're making just as much of a gamble to pay point and buy down rate or pay closing cost to do the refi or staying put and do nothing because you don't want to pay closing cost, hoping rate will go lower. Every decision you make about refinancing is a gamble. I've made all of those decision and lost big when I thought I could time the bottom of interest rate and bought points because I will be owning this house indefinitely.

Submitted by Coronita on May 1, 2016 - 5:02am.

FlyerInHi wrote:
I just read this thread quickly.
Harvey is right, you have to evaluate the NPV of different alternatives based on the info you have today. That means is you want to keep the house/loan for a number of years it makes sense to buy down the rate. The loan with cost might be a better alternative.

One thing I remember about finance is that we assume that capital is unlimited or readily available, so we should choose the investment with the highest NPV. Problem is most people don't have the cash to select the best alternative.

Ok, show us then.

Now both Harvey and you are claiming to know how to evaluate this with NPV. I have yet to see anyone do this with numbers. Without that, to me that just seems like people just want to (again) argue for the sake of arguing.

So why doing either you or Harvey show us what you are talking about. Afterall, both of you seem to have a lot of time to be talking about politics on an RE forum..Asking you to show how how NPV works out in this case should be a walk in the park, for finance majors, right?

IT seems like now that BOTH you and Harvey brought up NPV to this discussion, you brought it up in a backassward way. Because, correct me if I'm wrong, but if someone is saving $150/month in the near term, isn't that $150/month freed up today available for someone to use EITHER to pay more principal on a mortgage OR to invest it elsewhere?

So in the case of paying the mortgage off early, it's like putting that $150/month to work in a 3.75% ROI... Or if the person doesn't pay that extra $150/month and invests it elsewhere, whatever that ROI is? In either case, how is either or both scenarios worse off than not refinancing and having to pay the bank an extra $150/month, when at the end of either loans (either continuing to pay loan 1 or refinancing to loan 2), neither is really paying more total interest (which Harvey now also says, evaluating total interest is meaningless), and if the bank is also adding a cash rebate up front of $5-10k?

Of, if one does want to bring up NPV, isn't it also incorrect than to compare loan1 and refinanced2loan by total interest paid having to be equal, "otherwise you lose"? Afterall, if you refinance and extend your loan out an additional 5 years, interest paid for those 5 years, even if more also needs to be discounted to present value and compared to the ROI of your cash back up front and the $150/month cash savings you get immediately?

This doesn't appear to be rocket science, but now you folks are bringing up NPV and seems like over-complicating things.

Submitted by no_such_reality on May 1, 2016 - 6:58am.

With the right WACC and discount rate you can talk yourself into or out of any investment. Even buying a UTC condo for the octogenarian client's life estate.

To do either there needs to be answers to the questions i posed. I asked them because last refinance I did it was still Wild West.

Short of some wacky discount rate or exorbitant not mentioned cost, the NPV on your refi scenarios greatly favors the refi. Per my numbers above on mine the PV of FV of $33k ish is around $17.5k.

If the riefinance is "no cost" then a 0.125% no cost refinance with partial point credit back is worth doing regardless of loan amount. If that scenario doesn't make sense, then there are other costs not being covered by "no cost" or a float issue with your other expenses to close.

I have no problem with brokers making money, it's like real estate agents. it's the cost of doing business. I like to know up front how my partners in a deal are making money and roughly how much.

Years ago, you could deal with a bank and they'd tell you the rate was 4%, you'd then call a broker, theyd tell you 3.75% and he'd make a nice commission on it. And it would be with the same bank. The broker provided a service so its fair they get paid, the financial sector though was treating me like a cow to be milked. Has that changed?
.

Submitted by harvey on May 1, 2016 - 7:52am.

FlyerInHi wrote:
I just read this thread quickly.
Harvey is right, you have to evaluate the NPV of different alternatives based on the info you have today. That means is you want to keep the house/loan for a number of years it makes sense to buy down the rate. The loan with cost might be a better alternative.

One thing I remember about finance is that we assume that capital is unlimited or readily available, so we should choose the investment with the highest NPV. Problem is most people don't have the cash to select the best alternative.

And the point I'm trying to make is that mortgage brokers do not have an incentive to present all the alternatives in an objective way.

The cash cows of the consumer finance industry are the financially unsophisticated. Most Americans are perpetually struggling with cash flow, and the market for "no cost" and "cash back" products of all sorts is huge.

I'm not going to try to teach a course in finance on an internet forum. All anyone needs to know to do the calculations is that future cash flows need to be discounted. The rest is an exercise for the reader.

The more interesting question is why banks would even offer "no cost" and "cash back" loan products? They certainly aren't doing it for charity. I am entertained by the lack of cynicism here.

The answer of course is that the banks expect to gain it back over the long term. My advice to anyone doing a refi that expects to keep a property for any number of years is to avoid "no cost" and "cash back" loans (and anyone that even offers them.) They are simply too good to be true.

Submitted by NotCranky on May 1, 2016 - 8:41am.

What's getting trolled here is "mystique" ," you are a bunch of idiots" he says with the hidden agenda of getting people, namely potential clients, to let him think for them. HLS has the secrets. He knows a good number of people choose aggressive people that are willing to twist people's words to come out looking like he holds a secret that will serve a client better than other mortgage brokers can , it's all about "choose me"….hook , line , sinker.

That's not to say he isn't a good mortgage broker, he probably is, people say he is, so I believe them . It's just right now the bait of choice is the "no cost loan". Actually it's his knowledge of the no cost loan and everybody else's stupidity that he is using. That's why I don't like his contributions, he selectively absorbs to the topic spits back other peoples comments twisted to serve this ploy , massively puffs himself, plays the martyr while being verbally abusive ( "I do a ton of free counseling and just get beat up for it" "idiot this, idiot that").

Submitted by an on May 1, 2016 - 9:43am.

harvey wrote:
FlyerInHi wrote:
I just read this thread quickly.
Harvey is right, you have to evaluate the NPV of different alternatives based on the info you have today. That means is you want to keep the house/loan for a number of years it makes sense to buy down the rate. The loan with cost might be a better alternative.

One thing I remember about finance is that we assume that capital is unlimited or readily available, so we should choose the investment with the highest NPV. Problem is most people don't have the cash to select the best alternative.

And the point I'm trying to make is that mortgage brokers do not have an incentive to present all the alternatives in an objective way.

The cash cows of the consumer finance industry are the financially unsophisticated. Most Americans are perpetually struggling with cash flow, and the market for "no cost" and "cash back" products of all sorts is huge.

I'm not going to try to teach a course in finance on an internet forum. All anyone needs to know to do the calculations is that future cash flows need to be discounted. The rest is an exercise for the reader.

The more interesting question is why banks would even offer "no cost" and "cash back" loan products? They certainly aren't doing it for charity. I am entertained by the lack of cynicism here.

The answer of course is that the banks expect to gain it back over the long term. My advice to anyone doing a refi that expects to keep a property for any number of years is to avoid "no cost" and "cash back" loans (and anyone that even offers them.) They are simply too good to be true.


LoL, I did just what you suggested and I lost big. So you lost your credibility right there. If you think it's too good to be true, you really don't know what you are saying.

Also, nice try dodging the request to show data.

Submitted by FlyerInHi on May 1, 2016 - 12:12pm.

AN wrote:

LoL, I did just what you suggested and I lost big. So you lost your credibility right there. If you think it's too good to be true, you really don't know what you are saying.

Also, nice try dodging the request to show data.

You lost because rates went down. So your buy down fees were "thrown away".
But decision making is based on what you know in the present and expect the future to be. That's how you evaluate alternatives.
Your decision at the time was sound, but your assumptions were wrong.

1/2 the population believes that we will have a debt crisis because of deficit, entitlements, etc.... If you believe that will happen, you should buy down the rates. If not, you don't have the force of your convictions.

Submitted by an on May 1, 2016 - 12:43pm.

FlyerInHi wrote:
AN wrote:

LoL, I did just what you suggested and I lost big. So you lost your credibility right there. If you think it's too good to be true, you really don't know what you are saying.

Also, nice try dodging the request to show data.

You lost because rates went down. So your buy down fees were "thrown away".
But decision making is based on what you know in the present and expect the future to be. That's how you evaluate alternatives.
Your decision at the time was sound, but your assumptions were wrong.

1/2 the population believes that we will have a debt crisis because of deficit, entitlements, etc.... If you believe that will happen, you should buy down the rates. If not, you don't have the force of your convictions.

that's exactly my point. Regardless of what you choose, you're making a gamble. Even if I didn't buy down rate but just pay closing cost, I would still have lost.

Submitted by FlyerInHi on May 1, 2016 - 1:16pm.

The hardest part is making sure your assumptions are correct.

I have an adjustable mortgage from 1989. It was a brand new house back then and there were incentives from the builder. Never refinanced

Submitted by Coronita on May 1, 2016 - 1:49pm.

I still don't see any updates and data from people with a finance background....

Submitted by NotCranky on May 1, 2016 - 2:24pm.

O.K. Data, So what is the best owner occupied "no cost" refi rate today on 130k ,20% LTV, >740 credit, zero back end debt?

Submitted by Coronita on May 1, 2016 - 6:33pm.

Rustico, I don't know ask a mortgage broker..

I'm stlll waiting, however, for a response from Harvey or BrianSD to correct the spreadsheet I put together. Afterall, both said it's clearly wrong, and one of them said he is a finance major. So this should be a walk in the park for a finance major.

Submitted by FlyerInHi on May 1, 2016 - 6:56pm.

flu, I didn't look at your spreadsheet so I don't know what they're all about... but quickly here. You don't want to evaluate an old loan vs. a new loan (that's how loan sales people say "i can save you money"). You should look at all the alternatives available today based on some assumptions that your bring to the table.

It's like buying a new car. Look at the new cars available. It makes no sense to evaluate your one old car, against just one new car.

Submitted by harvey on May 1, 2016 - 11:09pm.

flu wrote:
Rustico, I don't know ask a mortgage broker..

I'm stlll waiting, however, for a response from Harvey or BrianSD to correct the spreadsheet I put together. Afterall, both said it's clearly wrong, and one of them said he is a finance major. So this should be a walk in the park for a finance major.

Sorry dude, I'm not going to do your homework for you. I looked at your spreadsheet and saw the telltale noob mistake of not discounting future cash flows and that was that. A precise schedule would take a couple of hours to get right. You chose to turn our conversation into a project, not me. If you and your buddy AN don't believe I have "credibility" then I can live with that.

Just use the spreadsheet you have. It may be close enough for what you are trying to do, whatever that is. It seems you just want validation for your past decisions.

So here's some validation: You outsmarted the bankers. They were chumps when they gave you that up front cash on a refi. They didn't have an ulterior motive and didn't even do the math. They were happy to reduce their bottom lines and make your insurance payments for you.

Yup, they just wanted to give you money. And you were smart enough to take it.

Submitted by Coronita on May 1, 2016 - 11:27pm.

harvey wrote:
flu wrote:
Rustico, I don't know ask a mortgage broker..

I'm stlll waiting, however, for a response from Harvey or BrianSD to correct the spreadsheet I put together. Afterall, both said it's clearly wrong, and one of them said he is a finance major. So this should be a walk in the park for a finance major.

Sorry dude, I'm not going to do your homework for you. A precise schedule would take a couple of hours to get right. If you and your buddy AN don't believe I have "credibility" then I can live with that.

Just use the spreadsheet you have. It may be close enough for what you are trying to do, whatever that is. It seems you just want validation for your past decisions.

So here's some validation: You outsmarted the bankers. They were chumps when they gave you that up front cash on a refi. They didn't have an ulterior motive and didn't even do the math. They were happy to reduce their bottom lines and make your insurance payments for you.

Yup, they just wanted to give you money. And you were smart enough to take it.

You see Harvey that's where you are wrong.

I don't need validation for what I did in the past, because unlike most people, if I did something that less then optimal in the past and someone brings it up with actual data or proof, I want to know about it. Just like in the past when I was on the bandwagon of "now is not a time to buy more rental properties, where some folks sent me data that showed me otherwise".

I just don't like folks who argue for the sake of arguing, and then when asked, ok "well show your work", nothing, zip, nada. In the past, for example, folks comment on real estate and places where they know nothing about (hence the term LETDLITA).

Here's the thing I don't get. If your arguments are really valid and easily shown, you would do it. You say you don't want to "waste" your time to post real data

...BUT, you already wasted A LOT of your time to initially comment on this thread, and then check up many times on this thread, and to reply many times to this thread. So it seems like, at least to you, this thread is pretty important to you. So, if it's so important to you to make your point, and if what you are saying is can be backed by a real example with real data from someone with finance background such that this would be so easy to, why wouldn't you want to show people what you are talking about? Because after all, you already spent a considerable amount of time already expressing your opinion on this subject, and spent considerable number of days reading some of these threads, and responding to these threads. It's not like anyone is really questioning your credentials. But, it's just like many other times we see here from others. For example, someone else professing to be real estate expert in area X, despite not living in area X, not having been to area X, and then when asked for "more data', getting into some off tangent comment about "construction quality of homes, the number of walls, and lizard-infested locations" that has nothing to do with the original discussion, as was exemplified by other posters.

So, if you are in the capacity to show us what you mean, why don't you? I mean, certainly it's more interesting, more relevant, and more useful to this blog than the 9+page about Donald Trump, or the 9+page of the 2016 Presidential Election, or the 9+page of reasons why someone can/cannot vote for Trump or Celebrity Endorsements. Afterall, this is an RE and to a lesser extent a finance blog. So why, if you are in the capacity to show us what you are talking about, why wouldn't you?

I don't think it would take hours. It certainly wouldn't take any more hours than you have alreay spent on this blog commenting on this very thread, and reading every comment someone has typed on this thread.

Why now, when someone asks us if you can enlighten us what you are talking about, all the sudden is time so important to you?

Again, if you show me what you're talking about, I'll be happy to the first to admit decision I made in the past was sub-optimal or flat out wrong if that's the case. I don't care. I don't have to be "proud" of my past decisions. Frankly, the only thing I care about, is having the right information so in the future I can make more money. So, if that means being wrong and called an idiot, fine. I can live with that.

Submitted by an on May 2, 2016 - 12:03am.

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