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retirement planning

The last year we retired our tax rate jointly was about 28 percent above $80k.

When we are forced to to take distributions at age 72 it will probably be in the same range so the "withdraw at a lower tax rate when retired" won't work out of us which is why when we reach medicare age of 65 we will be pulling out as much as possible, (or rolling into a Roth), between 65 and 70 when we are forced to take Social Security under the assumption that our incremental tax rate before SS and RMDs will be lower than after.

Right now we don't take any money out of our IRAs as it would jeopardize our Health Care subsidy.
 
- I owe about $445,000 on my mortgage
- I pay 3.625% right now for $2400 a month base (I pay $3000)
- I was quoted 2.99% for 15 years by CashCall with a $995 fee or 3.375% for a 30 year

Worth doing?
 
15 yr at 2.99 looks really good to me as long as there's just the $995 fee. IMO getting out of a mortgage asap is better than those who say you should invest the extra $$ that you could be using for a shorter term mortgage. Typically when a mortgage term ends you are at an age when you have a higher risk of being laid off or encountering some sort of medical condition that prevents you from working.

I changed our 30yr to 15 a few years ago. The house will be paid off when I'm 49. Just in time when my older son starts college (maybe). yaaay. :laughing
 
as long as your current rate is fixed over the term and the additional payments are lowering your principle rather than prepaying your interest i would keep what you got
 

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HappyHighwayman said:
- I owe about $445,000 on my mortgage
- I pay 3.625% right now for $2400 a month base (I pay $3000)
- I was quoted 2.99% for 15 years by CashCall with a $995 fee or 3.375% for a 30 year

Worth doing?
Click to expand...



You can find a gazillion loan payoff calculators on the net. If you put your numbers in there, you get the following:

Existing loan: If you keep paying $3000 per month, you’ll pay off your loan in 16.5 more years and pay a total of $146,163 in interest.

If you went down to 2.99%, 15-year, your monthly payment would go up to $3,071 per month, you would pay off your loan a year and a half faster, but you would only pay about $107,768 in interest.

So, it’s up to you if you want to pay to refi now to save yourself about $40K in interest over the life of the loan. But, please note that $995 is only the fee. There are a lot of of other closing costs on top of that fee as well. It’ll be closer to $4000-$5000 out of pocket to refi.
 
gnahc79 said:
This is handy HHM https://www.mortgagecalculator.org/download/excel.php

I think I did the numbers right, with the 15yr and lower rate there's about $35K in savings for total interest.
Click to expand...

I don't think you are looking at the situation correctly. What you compared was a brand new 22 year loan vs. a brand new 15 year loan.

What needs to be considered is the original loan, original rate, and original term duration... With 22 years remaining on the term, the 8 years that has been already paid are already gone. We are only interested in the amortization chart looking forward; from year 9 through year 24 (the anticipated 15 year payoff per HHM). In these 15 years, rough calculation says $177,600 of interest will be paid.

Compare that to $445,000, 15yr, 2.99%. Over the course of this 15year term, only $107,000 interest is paid.

You would stand to save $70,000 if you did the refi.

I don't understand where the $100 per month savings is coming from though. Current loan is ~$2,400/mo, but the proposed 15yr refi loan payment would be ~$3,000.

EDIT: Wait, my numbers are off since I don't know the original loan amount. I assumed the $445,000 balance with remaining 22 years on term, but did not factor in larger principal payments...so my numbers are wrong, but I believe my methodology to look at the the 15 year period within the overall original loan is the proper method to evaluate.
 
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yeah my assumption of a 22 yr loan is off a bit for the amortization schedule of HHM's real 30 yr loan. It's still a considerable amount of $$$ saved when switching to a 15 yr at the lower rate. Even with the standard refi costs.
 
His interest would go down commensurate with extra principal payments as it is compounded on a monthly basis so you can’t just take the original amort table you have to make a new one factoring in his current and future principal payment increases
 
My current monthly payment is $2400 but I've been contributing $3000 a month and each extra $600 goes straight to the balance and not interest.
I just don't like whart I've read about the company and service (thanks Smash Allen).

I think it's a good idea. I can find a mortgage broker or contact my original one to shop around and find a better deal and company.
 
Smash Allen said:
His interest would go down commensurate with extra principal payments as it is compounded on a monthly basis so you can’t just take the original amort table you have to make a new one factoring in his current and future principal payment increases
Click to expand...

Hmmmmmm. I just plugged stuff into the calculator, and it looks like you are correct. I thought I was correctly tracking my first years of payments and any extra I contributed seemed to come off the principal amount, but my principal/interest ratio was continuing to track with the original schedule...I guess I was wrong...??? I need to take a look at my statements a little closer!!!
 
So I got a quote from my existing mortgage company (PennyMac/Fannie May):

I spoke with my manager today and he said we can do 2.74% with a 2.802 apr and 0 discount points on a 15 year fixed loan.
Click to expand...

CashCall advertised $995 which I believe is literally all the fees you need to pay so I assume it would be similar ? How do I really figure out what it will "cost" me to save money?
 
2-3k sounds more normal :thumbup. FYI you will likely be required to have your homeowner's insurance coverage updated for the newly assessed value from the refi.
 
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