You folks that took out 30 year loans / refinances at 3% or lower...you're banking now.

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Submitted by Coronita on October 4, 2022 - 6:28am

Submitted by sdrealtor on October 4, 2022 - 9:07am.

Those sub 3% mortgages were the opportubnity of a lifetime!

Submitted by scaredyclassic on October 4, 2022 - 9:53am.

well...really, you're just breaking even after tax. not quite a winner yet

Submitted by Coronita on October 4, 2022 - 10:21am.

scaredyclassic wrote:
well...really, you're just breaking even after tax. not quite a winner yet

Yes, but we know that this will change consider we still have a boatload of rate hikes coming....

Submitted by scaredyclassic on October 4, 2022 - 10:37am.

i KNOW NOTHING.

Submitted by The-Shoveler on October 4, 2022 - 10:39am.

Everyone's seems to be telling the fed to "STOP!!!"

Stock market seems to think fed's going to listen.

Submitted by scaredyclassic on October 4, 2022 - 1:40pm.

Like Russia the fed may declare victory and back away. But maybe not.

Who the heck knows

Submitted by svelte on October 4, 2022 - 3:33pm.

Coronita wrote:
scaredyclassic wrote:
well...really, you're just breaking even after tax. not quite a winner yet

Yes, but we know that this will change consider we still have a boatload of rate hikes coming....

Imagine that cash will still be worth less every year when taking into account inflation. Even after more rate hikes.

Submitted by Coronita on October 4, 2022 - 3:56pm.

svelte wrote:
Coronita wrote:
scaredyclassic wrote:
well...really, you're just breaking even after tax. not quite a winner yet

Yes, but we know that this will change consider we still have a boatload of rate hikes coming....

Imagine that cash will still be worth less every year when taking into account inflation. Even after more rate hikes.

But it's not your cash to begin with.. it's borrowed. And if it was taken on a primary.. your equity was just sitting there doing nothing anyway. Your primary isn't earning money..

Submitted by svelte on October 4, 2022 - 6:04pm.

Coronita wrote:

But it's not your cash to begin with.. it's borrowed. And if it was taken on a primary.. your equity was just sitting there doing nothing anyway. Your primary isn't earning money..

Neither is the money your borrowed.

Let's say you borrowed 500,000 at 3%. That's costing you $15K per year.

Let's say you put that 500,000 in a CD earning 4.25%. That's 21,250

21250- 15K = 6250.

Say you pay 30% taxes, state and fed. 21250 x .30 = 6375. You're underwater.

Let's be very generous and say you pay 25% taxes, state and fed.

21250 x .25 = 5312. you made $900.

Submitted by sdrealtor on October 4, 2022 - 6:06pm.

svelte wrote:
Coronita wrote:

But it's not your cash to begin with.. it's borrowed. And if it was taken on a primary.. your equity was just sitting there doing nothing anyway. Your primary isn't earning money..

Neither is the money your borrowed.

Let's say you borrowed 500,000 at 3%. That's costing you $15K per year.

Let's say you put that 500,000 in a CD earning 4.25%. That's 21,250

21250- 15K = 6250.

Say you pay 30% taxes, state and fed. 21250 x .30 = 6375. You're underwater.

Let's be very generous and say you pay 25% taxes, state and fed.

21250 x .25 = 5312. you made $900.

You can deduct interest on a first mortgage on your primary

Submitted by scaredyclassic on October 4, 2022 - 8:56pm.

sdrealtor wrote:
svelte wrote:
Coronita wrote:

But it's not your cash to begin with.. it's borrowed. And if it was taken on a primary.. your equity was just sitting there doing nothing anyway. Your primary isn't earning money..

Neither is the money your borrowed.

Let's say you borrowed 500,000 at 3%. That's costing you $15K per year.

Let's say you put that 500,000 in a CD earning 4.25%. That's 21,250

21250- 15K = 6250.

Say you pay 30% taxes, state and fed. 21250 x .30 = 6375. You're underwater.

Let's be very generous and say you pay 25% taxes, state and fed.

21250 x .25 = 5312. you made $900.

You can deduct interest on a first mortgage on your primary

Std deduction too big, interest too tiny

Submitted by scaredyclassic on October 4, 2022 - 8:59pm.

Not worth it

Submitted by an on October 4, 2022 - 11:28pm.

scaredyclassic wrote:
Not worth it

Any $ I can make for doing nothing is worth it for me.

Submitted by an on October 4, 2022 - 11:30pm.

CD rate doesn't make me salivate as much as the inflation rate. Transitory, right?

Submitted by Navydoc on October 5, 2022 - 12:15am.

We refi'd fall 2020, got a 30 yr fixed jumbo VA at 2.5%. Still can't believe it. Pretty sure we will NEVER see rates like that again.

Submitted by brg654 on October 5, 2022 - 6:15am.

because i refinanced in 2020, my total expenses are lower today than in 2019, even after the inflation in everything else. meanwhile, my pay is up 34% since 2019.

Submitted by scaredyclassic on October 5, 2022 - 7:20am.

an wrote:
scaredyclassic wrote:
Not worth it

Any $ I can make for doing nothing is worth it for me.

Sure but this isn't nothing. You have risk of interest rate going back down

Submitted by The-Shoveler on October 5, 2022 - 7:39am.

an wrote:
CD rate doesn't make me salivate as much as the inflation rate. Transitory, right?

Sooner or later the feds got to pivot,

IMO buying long dated treasuries may really pay off at that moment.

just my thoughts.

Submitted by an on October 5, 2022 - 10:22am.

scaredyclassic wrote:
an wrote:
scaredyclassic wrote:
Not worth it

Any $ I can make for doing nothing is worth it for me.

Sure but this isn't nothing. You have risk of interest rate going back down

Of course it's nothing. All I had to do was sign some paper.

As for when rates go back down again, I'll worry about it when that happens. I can always just pay off my loan, or not.

Submitted by scaredyclassic on October 5, 2022 - 10:37am.

ok, but what about the years when interest was zero or close to it. if the money was sitting around waiting for this arbitrage, you were losing money for it sitting in a checking account waiting for this opportunity.

Submitted by an on October 5, 2022 - 10:41am.

scaredyclassic wrote:
ok, but what about the years when interest was zero or close to it. if the money was sitting around waiting for this arbitrage, you were losing money for it sitting in a checking account waiting for this opportunity.

Who said it was sitting in a checking account doing nothing? There are many places you can invest. More real estates or the stock market. How much has rent gone up over the last couple of years?

Submitted by scaredyclassic on October 5, 2022 - 9:16pm.

an wrote:
scaredyclassic wrote:
ok, but what about the years when interest was zero or close to it. if the money was sitting around waiting for this arbitrage, you were losing money for it sitting in a checking account waiting for this opportunity.

Who said it was sitting in a checking account doing nothing? There are many places you can invest. More real estates or the stock market. How much has rent gone up over the last couple of years?

You can lose money too, waiting for interest arbitrage opportunity.

Submitted by an on October 5, 2022 - 10:04pm.

scaredyclassic wrote:
an wrote:
scaredyclassic wrote:
ok, but what about the years when interest was zero or close to it. if the money was sitting around waiting for this arbitrage, you were losing money for it sitting in a checking account waiting for this opportunity.

Who said it was sitting in a checking account doing nothing? There are many places you can invest. More real estates or the stock market. How much has rent gone up over the last couple of years?

You can lose money too, waiting for interest arbitrage opportunity.


Of course you could... but we're talking about hindsight here.

You would lose money if you didn't refi to a lower rate.

You would lose money if you got scared and didn't buy your primary home and continue to rent.

You could lose money...

Submitted by scaredyclassic on October 6, 2022 - 4:55am.

So basically at the end of the day, if you could pay your house off and don't, you refi and have a pile of money to gamble with at 2-3 perc interest.

Submitted by an on October 6, 2022 - 12:39pm.

scaredyclassic wrote:
So basically at the end of the day, if you could pay your house off and don't, you refi and have a pile of money to gamble with at 2-3 perc interest.

uh... no

Submitted by scaredyclassic on October 6, 2022 - 1:44pm.

an wrote:
scaredyclassic wrote:
So basically at the end of the day, if you could pay your house off and don't, you refi and have a pile of money to gamble with at 2-3 perc interest.

uh... no

ok. a pile of money to "invest" and hopefully beat the 2.5% you have to pay, really 3.0 percent return before taxes. a couple negatvie years and you will be a long time coming back at a small interest rate differential arbitrage.

Submitted by an on October 6, 2022 - 2:25pm.

scaredyclassic wrote:
an wrote:
scaredyclassic wrote:
So basically at the end of the day, if you could pay your house off and don't, you refi and have a pile of money to gamble with at 2-3 perc interest.

uh... no

ok. a pile of money to "invest" and hopefully beat the 2.5% you have to pay, really 3.0 percent return before taxes. a couple negatvie years and you will be a long time coming back at a small interest rate differential arbitrage.


History said no. Not hoping but historical data.

Submitted by scaredyclassic on October 6, 2022 - 2:27pm.

an wrote:
scaredyclassic wrote:
an wrote:
scaredyclassic wrote:
So basically at the end of the day, if you could pay your house off and don't, you refi and have a pile of money to gamble with at 2-3 perc interest.

uh... no

ok. a pile of money to "invest" and hopefully beat the 2.5% you have to pay, really 3.0 percent return before taxes. a couple negatvie years and you will be a long time coming back at a small interest rate differential arbitrage.


History said no. Not hoping but historical data.

history?

past results do not predict future returns.

Submitted by an on October 6, 2022 - 2:55pm.

scaredyclassic wrote:
an wrote:
scaredyclassic wrote:
an wrote:
scaredyclassic wrote:
So basically at the end of the day, if you could pay your house off and don't, you refi and have a pile of money to gamble with at 2-3 perc interest.

uh... no

ok. a pile of money to "invest" and hopefully beat the 2.5% you have to pay, really 3.0 percent return before taxes. a couple negatvie years and you will be a long time coming back at a small interest rate differential arbitrage.


History said no. Not hoping but historical data.

history?

past results do not predict future returns.

Who said future returns... I'm talking about past results. You're just moving the goal post.

Also, what about all the people who don't have 500k last year, but was able to locked in at <3% for 30 years to buy their first home?

Or, what about people who were at 4-5% and refi to lock in at <3%? Take all the $ they save and buy a 5years CD today?

Submitted by JPJones on October 6, 2022 - 11:40pm.

an wrote:
Or, what about people who were at 4-5% and refi to lock in at <3%? Take all the $ they save and buy a 5years CD today?

This was the biggie for our household. For us, it's not about leveraging equity for the greatest financial gain, but rather reducing our monthly overhead as near to zero as we can manage without taking any real financial risks. I know there are faster, more effective ways to get there, but I've never liked this culture of debt the royal we seems so attached to. I think that part of our culture is why our economy seems to go sideways with the slightest imbalance, so I avoid it as much as I can manage.

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