... now is probably the best time to do so. Thought I would share ...

I close on a refi Monday at a 3% rate

I have enough equity, that I'm cashing out enough to be debt free on everything except my mortgage, obviously.
Increasing the term by 7 years and the monthly payment is going down $100/month.

My home appraised for a LOT more than I first thought it would ... a LOT.

During my appraisal, I learned quite a bit ...

A kitchen remodel/update will get you about 120% of the money you spend.
New paint and tile in a bathroom is not considered an "update" ... bupkis.
A new 16 SEER HVAC ... bupkis.

A 1200 sq/ft shop will modify the appraisal $25K ... according to the appraiser, it would take $60K to replace it.
I need to chat with my insurance agent ...

I shopped around for a lender. I contacted several brokers and wound up with 4 GFEs.
When I chose my broker and started the process, I learned that my Credit Score took a hit ... a pretty substantial hit ... due to numerous pulls of my credit score from all those lenders. Really?
This came back to bite me in the end. Lots more more paperwork, documentation and a couple grand in by-down points.

But, the lender allowed me to negotiate and purchase many of the required processes, like a survey. I was able to save a couple hundred by negotiating outside the title company process. And the same holds true for a title company. I was able to negotiate a reduce fee structure by allowing me to freelance much of the documentation. I've been working nights the last few weeks, so I can pull records and do much of the leg work. Again saved several hundred bucks all used for the buy down points to get me at 3%.

The survey was interesting. My shop is built 6" into an easement.
Neighbors to the south have their fence running almost a foot into my property.
I have 5% more land than what was on my original survey.

It's taken several weeks longer than normal because of the route I chose.
But I learned a lot about the process, the post bail-out red tape, where to spend money, how to work the system ...

Any way, just thought I'd share ...

It's good to know the property values are going up. We refinanced two years ago. It was the second refi for us, with the first one being to get equity to get our shop built. With the second refi, to take advantage of the new interest rates, our 2.5 acres property WITH a $140K shop on it appraised for $20K LESS than it did to get the cash to build the shop!! And we didn't just throw up a pole barn!

Anyway, yes, the refi significantly reduced our note. Our interest rate we got then is about 4-3/8%, and the payments are about 2/3 what we were paying before. We're still making payments that are almost as much as we were before, to pay down the note early, but we're also now able to save up for the big ticket items, like slicks and a new engine for the Firebird.

And yeah, don't get any credit checks until you're ready to refinance. That includes getting a new car, or financing that plasma TV. Even those 'don't make any payments for a year' things. They are still loans, and you'll get a credit check which will affect your credit rating. Yes, it's really, really stupid, but that's the way they've set it up.

It's nice to know home appraisals have gone up, and now's a great time to pull the trigger on a refi, if you can swing it.

We actually just checked on our house. We only owe 7 more years and could not make up the difference by refinancing for the lower interest versus the closing cost and all the other money grubbing that goes along with financing a house so we left as is.

I think for anyone still oweing 10+ years is definitely the thing to do. My banker friend was telling me how dangerous these loans are for the banks for the future, when the cost of money for them becomes more than they are getting for the mortgages there will be big issues in banking again.

My cost/benefit was almost a wash ... I had 8 years remaining on my mortgage.

Becoming debt free was too big of a carrot dangling not to do it.

Now I can max out my 401K contributions, maybe give Bryan a few bucks to make me rich beyond my wildest dreams, prepare for the apacolypse, buy more guns and silver, put in that underground bomb shelter I've always wanted ...



According to my appraiser, it's not the fact that they are rising, rather this area hasn't been hit as hard as others.

Man, I need to go see the CrashTest shop.

Maybe I am part of the 99%. I had a note in my BofA statement a couple months ago that I may qualify for HARP: http://www.makinghomeaffordable.gov/progra...Pages/harp.aspx

I figure with the current prepayments, the house will be done in about 5 years but if I can get a rate reduction using my own tax money, I might as well try it. BofA rep told me they pull credit on everybody on the loan, wife and I, and show an offer on a new rate.

The irrational side of me says re-fi and pull every dollar I can out at these rates.

I was suprised at the costs associated with buying down to the 3% rate. At the loan amount and rate, a point didn't amount to a whole lot.



I was shocked to say the least.

I built the thing in '99 for under 10K




You understand just how tempting that is.
I mean who wouldn't jump at a credit card with a fixed and GUARANTEED NEVER TO CHANGE 3% ...

Nice work Mitch. Yes if you have more than 1-2 hard credit inquiries your credit will take a hit. When shopping different lenders request a GFE based on a certain credit score. You can get your own free anyway. Then when you pick who you want to use they will check your credit. Let me know when you have to register with the ATF for weapons of mass destruction.

Dave-I have several options that will get you a better rate than BofA. Also, they can close on the loan within a month whereaa the big banks will take you months and be a pita.

Also, I recommend anyone that does a refi to go with a 15 year. Have to be careful about using it as a piggy bank because of the low interest rate, too. A house isn't an investment-its just a place you live. Though the only debt you want to have is in a house if that makes any sense.

A house is absolutely an investment.

I used to believe that with all my soul. My focus was to get the mortgage paid off ASAP and be mortgage free.

But a mortgage is cheap money and a house is a tool to access it.

How bout "a house is a poor investment"? If you believe an investment is supposed to make money, then a house is a bad investment, especially bad in a down market. By the time you pay the maintenance, taxes, mortgage interest and miscellaneous costs, then find out your market value is less today than last year, you just lost a bunch of money. But you gotta live somewhere.

If you were fortunate enough to buy your house in say 1985....then you probably have a "good" investment based on the equity and market value increase built over time. But the prospect of having a house be a "good" investment right now is quite low, even with the low rates. Saying that a house isn't an investment is echoing the market. And it is true. For now.

How bout "a house is a poor investment"? If you believe an investment is supposed to make money, then a house is a bad investment, especially bad in a down market. By the time you pay the maintenance, taxes, mortgage interest and miscellaneous costs, then find out your market value is less today than last year, you just lost a bunch of money. But you gotta live somewhere.

If you were fortunate enough to buy your house in say 1985....then you probably have a "good" investment based on the equity and market value increase built over time. But the prospect of having a house be a "good" investment right now is quite low, even with the low rates. Saying that a house isn't an investment is echoing the market. And it is true. For now.

Congrats Mitch - 3% is awesome money. I hope I can get my refi going ASAP. I contacted the firm I went through the last time I refi'd two weeks ago and haven't heard back.

It only becomes a poor investment when you sell it and take a loss. The one great thing about real estate is it will eventually go up in value. Right now house prices are low, right? In 10 years, what do you think it's going to be worth? Probably something more than you bought it for.

I bought a house in Norfolk, VA in the wrong neighborhood, at the wrong time, and at a really high price. I swear as soon as I got the keys, the housing market crashed. I needed to move, so I rented it out. A property manager takes care of EVERYTHING. I know that someday the prices will recover and it'll be worth something again. Until then, my renters are paying for the house for me.

The house we live in right now. Been 3 years, and we've done a ton of remodeling (ourselves). We are going to have to move soon. If we sold it, we'd probably get enough to pay off our mortgage, but we'd loose everything we put into it. So, instead of dumping it, we're going to rent it out. Let someone else pay for it until it's worth something again.

A few months ago, we bought an old house, in decent shape, that needed a good, hard, scrubbing. $45,000 foreclosure. We have put less than $10,000 into it. So, call it $55,000 into it, right? Well, it's taxed assessed for something like $106,000. Even in today's economy, it should be able to sell for $80,000. Someday it'll be worth more than that. Until then, we have it rented for $725/month.

All I'm saying is this is the perfect time to buy houses. Real estate is the most likely investment to make money....eventually.


That being said, I'm really glad I saw this thread. I need to take advantage of the low rates and refinance. The only thing is I really don't want to spend the money to refinance right now. It's the out of pocket that I don't like. I'll probably make some phone calls next week.

Steve

Steve, you are banking on a couple things with that rental home ... your renters won't trash the place and will pay on time. There is a reason why that house was in foreclosure and needed a good scrubbing ... people couldn't afford to pay and they no longer cared about the home because it wasn't theirs.

And you are banking on the property values to begin to return. Once the economy does turn, the glut of homes on the market will keep prices depressed for years to come. Even 3% mortgages can't entice buyers.

Real Estate just isn't the safe place to put your money any more to see a ROI.

Like anything purchased, there is more to the bottom line than depreciation or appreciation. The cost of ownership has to be factored in. For real estate, taxes, insurance interest payments, maintenance ... all take away from the bottom line.

You can't buy dinner, clothe your kids, buy silver ingets or stock your bunkers with MREs with FMV or equity.

Mitch, where do you buy your silver and in what size can you get them?

I thought I'd posted pictures of it before, but here:

Right after we got the driveway poured:


The inside, right after moving most of the 'collection' in:



We'll be putting in the overhead lighting this fall, so we can work out there in the evenings/nights. The price of copper is a budget-buster these days.

OK, let me say one more thing. I understand what you are saying, but look at the bigger picture. First of all, maybe I wasn't clear about my plans and what I was saying. I'm not planning on selling these houses for a long time. I'm 30, and I want to keep these houses until I decided I need a lump of cash, maybe when I retire.

One thing about renters. I pay a property manager to show the house, screen the applicants, and take care of any repairs that need to be done. Credit score is very important. Not saying they are going to be perfect, but it really helps.

Let's look at this one house that I bought for $45K. Call it $55K after everything. After paying the property manager, I'm bringing home $650 a month, right? That's $7,800 a year and $78000 after 10 years. It's not a large amount of money by any means, but it's all someone else's money who will actually buy the house for me, pay the taxes, and also pay for the home warranty. The best part is that when (eventually over time) the value goes up, you can borrow against it. And that's with only one house! Once the house is paid off, we're going to do it again.

For me, it's a way to have control over my financial future. Having other people buy my houses for me isn't a bad thing.

OK, I'm done. Sorry to get off topic.

Steve

Little bit of apples vs oranges going on. Is a house bought to live in an investment? Sure you can try to make it look like an investment and approach it with the idea of investing but at the end of the day you have to live somewhere. Even people in the business with experience will tell you not to try and time the market when it comes to the house you live in.

Now what Steve is doing is investing in houses. That is completely different than talking about the house you live in. It is definitely a way to TRY and make some money. But don't forget to factor in your time and then the costs of the repairs after a renter leaves. It can easily wipeout any equity you thought they had paid for. It can be done and I know several people who have been successful but it still ends up being a career. Mostly that whole market is made up of people buying books and seminars, buying 2 houses and then realizing this isn't what they bargained for or they didn't make the kind of money they thought. For what its worth I rent the house out I lived in for 8 years and currently rent a house where I live-anyone want to buy a lakehouse?

And Gene that makes me jealous after slaving in my Dad's garage (6-8 car capacity) all weekend-nice setup. I can't wait for my wife to leave me so I can have a place like that with a small buildout for living quarters.

Lastly-do some research (Case/Schiller) and look back over 100 years to see the rate of return for housing. Yes, it does appreciate over time but check to see if its not close to 1% which is below the inflation rate. When it comes to an investment I certainly want something that beats inflation and doesn't require me to mow the lawn, maintain the pool, and fix the roof.