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by ineedasername 1880 days ago
Precisely... my loan was actually too small to qualify for the lowest rates, according to research & some friends in the business, rates like 1.75% were mostly for $250k+ loans, but I was still able to refinance a line of credit we'd used to expand out house years earlier to such a lower interest rate that we're saving more than 20% off our previous monthly payment & about $50k off the total life of the loan (assuming we do an extra payment toward the principal every once & a while, which we were doing anyway).

Basically if you have a home loan from 2+ years ago & still have the same level of steady income, it probably makes sense to refinance.
3 comments
ryanianian 1880 days ago
> assuming we do an extra payment toward the principal every once & a while

At the risk of veering into financial advice, paying extra principle early is almost never a good idea. Instead, put that money aside into an investment account and use it to pay off the mortgage once the sum is greater than the balance.

Assuming markets beat your interest rate, you'll have a higher return and you have the emergency fund in case something catastrophic happens. If you pay that to the bank you can't get it back in an emergency, and you will only cut down on the front-loaded interest--which will likely be under market returns.

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ineedasername 1880 days ago
At the risk of veering into financial advice...

Fine, but if my investments tank I'll be getting a subpoena for your IP from HN, and then from your ISP for you, so I can sue you for issuing financial advice without a license, thus causing me significant material harm. /s

Actually you're right, that's a very good idea.

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adrr 1880 days ago
Why pay off the principle when there are investment grade assets that pay higher return than the interest you’re paying. Not sure what they are now but municipal bonds were paying between 3% and 4% last year which is tax free. Interest rates being so low is just crazy.
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MeinBlutIstBlau 1880 days ago
Line of Credits typically go off of prime which is why you didn't get the lowest rate. Most institutions do something like prime + x%. If it was a 15 year fixed or 3 year ARM, then you most likely would've gotten an awesome rate.
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ineedasername 1880 days ago
We were refinancing a currently open (and fixed rate) line of credit we no longer needed into a lower interest traditional mortgage.
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