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Author: FiddleDeeDee Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308445  
Subject: Refi trends Date: 10/15/2012 12:55 PM
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"As mortgage interest rates fall further into uncharted territory, more homeowners in Massachusetts and across the United States are refinancing home loans to shorter terms, paying off their debts faster and saving thousands of dollars.

Economists say the trend indicates that lowering long-term debt has become a bigger priority for many borrowers than cutting monthly mortgage payments."

http://www.bostonglobe.com/business/2012/10/13/consumers-are...

This will create a stronger consumer in the next few years IMHO.

Andrea
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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306054 of 308445
Subject: Re: Refi trends Date: 10/15/2012 5:12 PM
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saving thousands of dollars.

That should be thousands of dollars in interest. The actual total savings is dependent on what you do with the difference in monthly payments between the shorter and longer term loans. It could be that there is a cost, not a savings for taking the shorter term loan.

PSU

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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306055 of 308445
Subject: Re: Refi trends Date: 10/15/2012 6:56 PM
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FiddleDeeDee,

You wrote, "As mortgage interest rates fall further into uncharted territory, more homeowners in Massachusetts and across the United States are refinancing home loans to shorter terms, paying off their debts faster and saving thousands of dollars.

Economists say the trend indicates that lowering long-term debt has become a bigger priority for many borrowers than cutting monthly mortgage payments."

http://www.bostonglobe.com/business/2012/10/13/consumers-are...

This will create a stronger consumer in the next few years IMHO.


I guess I'm bucking the trend here. My last mortgage (refi) was a 10yr FRM back in '03. I'd paid off about half of the loan when I sold the place.

Now I'm buying another place with a 30yr FRM with 20% down - going further into debt than I've ever been. Of course it helps that the new rate is almost a full point below my 10yr FRM. Thank you Bernanke!

Without these low rates, I'd probably be too intimidated to own a place in the Seattle area, so I'd be back to renting or I'd not have made this move. (Of course you could also argue that these prices are a result of low interest rates, so it could mean I've over-paid for this place - assuming rates are headed back up soon.)

Of course the payments (PI + Escrow + HOA dues) on this place are only going to be 55% higher than the payments on my first home back in 1988. If I were to adjust my payments back to 1988 dollars, the cash flow requirements for this place are only about 82% of my first place's.

I was also going to make a snide comment about wishing my wages had kept up with inflation. But then I went and ran the numbers and found that my current wage is in fact comparable to my 1988 wages. My wages have kept up with inflation - but only because I got a cost-of-living adjustment when I accepted this latest position. So I had to move to Seattle where it's like 35% more expensive to live in order to make what I made in 1988, if you adjust for inflation.

Well thank goodness my other expenses are so much lower these days...! :-)

- Joel
Who thinks it's so much prettier here than north Texas...

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Author: llamalluv Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306060 of 308445
Subject: Re: Refi trends Date: 10/21/2012 9:54 AM
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We're "against the trend" too. But we refinanced a 3.5 year old 30 year into a new 30 year with a 1.5% rate decrease, so not a huge increase in length of term.

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Author: kahunacfa Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306061 of 308445
Subject: Re: Refi trends Date: 10/23/2012 1:01 AM
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"saving thousands of dollars." - NO CITATION!!!

That should be thousands of dollars in interest. The actual total savings is dependent on what you do with the difference in monthly payments between the shorter and longer term loans. It could be that there is a cost, not a savings for taking the shorter term loan.

PSU
- PSUEngineer | Date: 10/15/2012 5:12:27 PM | Number: 306060

The correct answer to almost ANY question is almost always -- It Depends. That being written, as a Finance & Investment Professional <1974-Present> a longer-term, Fixed Rate Mortgage Loan is unequivocally better than a loan with a shorter maturity.

Kahuna, CFA
Venture Capital
Founding General
Partner 96745

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Author: kahunacfa Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306062 of 308445
Subject: Re: Refi trends Date: 10/23/2012 1:18 AM
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- Joel
Who thinks it's so much prettier here than north Texas...
- joelcorley | Date: 10/15/2012 6:56:04 PM | Number: 306061

Most places in the World are more attractive than inland Texas.

Turned-down two Investment job offers in Texas <1979 & 1982> because one of the "Selling points of the actually "Just Silly" 1979 offer was that there were NO State Income Taxes in Texas <A total insult to my Intelligence not to think I did NOT already know that>. The 1982 offer was actually competitive, half-a-mil + big sign-on bonus. I feared that the company could be on-the-block to be sold. One year later Rotan was acquired by PWMH in NYC. Everyone in the Investment Research Department was "Forced to move to NYC. The then Director of Research took the same position at a San Francisco Investment Banking and Institutional Investment brokerage firm.

Kahuna, CFA
Founding General
Partner Venture Capital
Limited Partnership
2012 - 2019 Kailua-Kona

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