All Forum Posts by: Jim Ying

Incredible!

I thought about it and realized that to compare apples to apples, I should be looking 30 years out, and comparing:

A: 30yr refi

B: refi for 15 or 20 years and then invest the savings once the mortgage is paid off.

I added a column showing the accumulated savings from after year 15 (or 20) when I'd no longer have to pay a mortgage and it completely changes the result. Refinancing to 30 years becomes the worst option and the best option is actually to refi for 20!

https://docs.google.com/spread...

@Todd Rasmussen That is an interesting argument. Based on that rationale, then the 'right' decision would be to refinance to a new 30year, pay the minimum, and invest the savings. 

I ran the numbers and it looks like you're right! Here's a summary of the findings and a link the spreadsheet. 

The benefit seem to be around $100k to refi to a 30yr and invest the savings (assuming a 6% return). It was surprising to me that the opportunity cost of refi'ing to the 15yr and paying $220 more per month basically wipes out any actual net benefit because I'm not investing that $220 in the meantime.

I have the creeping suspicion that I'm missing something though. For example,

Am I calculating the 'cost' of paying the extra $220 per month in the 15yr refi scenario correctly?

In the 15yr refi scenario, how do I account for paying off the mortgage earlier and getting to keep all the rent after 15 yrs as opposed to continuing to pay a portion of it in mortgage? Would I take the present value of investing that post-15 yr amount?

Also, are there tax benefits or fees that significantly impact the scenarios?

https://docs.google.com/spread...

Appreciate the response! PM’s for your broker’s info. 

I’m curious to hear why refinancing to a 30 year might be preferable. If I can pay the mortgage off in 20 or even 15 years at a lower rate, isn’t that preferable? If I were strapped for cash, I could see refinancing to 30 to get more monthly cash flow, but the $1-300 extra per month doesn’t seem to outweigh the $35-100k extra I’d be paying in the long-run. (see chart below)

I'm considering refinancing and have a Heloc w/ Penfed on the property. Has anyone been successful or failed at subordinating a Penfed Helo?

I have a condo in Seattle that used to be my primary residence in a location close to Amazon HQ. I've moved to the 'burbs and have been renting it out for the last 10 years. Here are the key stats:

$550k Zestimate (appraised at $600k last Aug for Heloc)

$232k remaining mortgage

4.625% interest rate

30 year mortgage, maturing in 2041 (21 years left)

$1,815 monthly payment: $565 principal, $900 interest, $350 escrow

$2,600 monthly rent collected

$600 HOA

$229k Heloc on the property at 4.75% (unutilized and applied for as cushion or if want to buy another property)

Aimloan, who the primary mortgage is through also, currently lists:

3.5% (3.617% APR) on a 15yr fixed rate refi of $232k for a $1,658 monthly payment

3.875% (3.955% APR) on a 20 yr fix rate refi for $1,390 monthly payment

both with ~$1k closing costs.

The current plan is to keep the condo as an investment property.

I'm currently paying $1,465 in principal + interest, so the 20 year seems like a good idea since I'm lowering monthly payments and shortening the payoff period by 1 year. The 15 yr is 1 whole point lower than my current 4.625 rate, and cuts off 6 years, but I'm paying $200 more per month.

I also want to make sure I can subordinate my Heloc, which is through Penfed. Even if I don't use it, it's great to have that buffer there. Has anyone had success subordinating their Penfed Heloc?

Should I refi?