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wallus

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homer MVP

homer

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My wife and I haven’t refinanced our mortgage during this current cycle and could potentially lower our rate by a full percentage point. I’m considering taking anywhere from $10K to $30K out as part of the refi and investing that money in equity index funds with the idea being that the long-term return on that investment will greatly exceed the 3% mortgage interest. I believe my wife and I have the financial discipline to let those funds ride for 10+ years. Aside from the obvious market risk (it’s possible my ROI doesn’t exceed 3%), am I missing any pitfalls?

 

I would think you'd beat 3% over a ten-year period in an index fund. I'd be shocked if you didn't.

"Dustin Pedroia doesn't have the strength or bat speed to hit major-league pitching consistently, and he has no power......He probably has a future as a backup infielder if he can stop rolling over to third base and shortstop." Keith Law, 2006
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LouisEly
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In the last month, natural gas is down over 20%.  Copper is down over 12% in the last month, down 30% from March highs.  Wheat is down 15% in the last month, over 30% from May highs.  Corn is down alm

wallus
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Ibond deadline is quickly approaching if you want the 9+%. I just got mine today.

homer
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that happened to a friend of mine. he was laid off from Salesforce and got a job with a start up. 

CheezWizHed Wisconsin Timber Rattlers

CheezWizHed

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Well, if the housing bubble bursts and you get upside down on your mortgage, you'd be stuck in the house and not able to sell it.

 

Probably a pretty small risk and a zero risk if you don't want to move in the next 3-5 years. That is about all I could see as a drawback.

 

I've heard people do an interest-only loan where they plan to pay off the mortgage with their investments. That has a bunch more risk to it, but that doesn't sound like what you are doing.

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igor67 First Round Pick

igor67

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You should be including tax implications in thinking about your break even point. With the changes a couple of years ago most people no longer have a big enough mortgage to get any tax benefits from the mortgage payment, but your savings on paying off early are completely tax free. The tax situation on your investment is hard to say without more details. You also increase your closing costs on the refinance (in most cases) by taking more money out as the origination fee is usually a flat percentage of the total loan. I would guesstimate that your true break even point is probably closer to 4%, still pretty doable
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CheezWizHed Wisconsin Timber Rattlers

CheezWizHed

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Just thought of another impact. When I spoke to my mortgage broker about cashing some money out of my house, she said that typically that is seen as a higher risk and I wouldn't get as low as a rate as a straight refinance.
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nodakfan17 First Round Pick

nodakfan17

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Thanks for the input. I inquired about a refi at the start of the downturn and I think I was told there were no extra fees associated with a cash out refi, but the LTV requirements were stricter. For example, if you needed an 80% LTV to qualify for the best terms on a conventional mortgage, you’d need a 75% LTV (after the cash is taken out) to qualify for the best terms on a cash out refi.

 

We bought our house in 2015 for $213,000 with $10,000 down. We currently owe $170,000 and our Zillow value is about $309,000. Our neighbor’s house just sold for that amount, so we have a reliable comp to support that valuation. It’d be really hard for us to get over our skis.

 

Having never refinanced before, I’m just weighing a few strategies. At a minimum, I think we’ll refinance to a 20-year fixed and add a HELOC. Our payment on a 20-year fixed would be similar to our current payment on the original 30-year fixed loan. It’d effectively cut 4 years off the life of the loan. I don’t have any plans to use the HELOC, but it’d be nice to have as an emergency line of credit.

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CheezWizHed Wisconsin Timber Rattlers

CheezWizHed

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Weirdly... when I refinanced, I couldn't quite get to a 15-year loan, but the 20 year wasn't a better rate than the 30-year. So I just took the 30-year and paid the 20-year equivalent payment. If you plan to stay in your house for a while, take a look at paying points. I paid the max points they would let me, added the amount to what I financed and took my rate down to 2.25%. Payoff will take 39 months, but since I plan on being here for a while, I wasn't worried about that. Saved thousands over the life of the loan.
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GAME05 ACL Brewers

GAME05

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So is this the crypto drop come early or just a bump in the road? Now that I've lost whatever gains I made since late March, I'm unsure of just how heavily I should still be in crypto compared to normal stocks.

 

Right now all I own for regular stocks is a college-apartment REIT and a nickel miner (my IRA I'm not wanting to move from a good fund I have). Both have been doing great, but with these inflation numbers I'm hesitant to be as active as I usually am.

 

And speaking of, what do you all tend to focus on when inflation is spiking the way it has? Or is inflation mostly just about not holding much cash?

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thebruce44 First Round Pick

thebruce44

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So is this the crypto drop come early or just a bump in the road? Now that I've lost whatever gains I made since late March, I'm unsure of just how heavily I should still be in crypto compared to normal stocks.

 

I think it is a bump in the road. Basically manipulation by the wealthy so that the top can blow off properly towards the end of the year. At least, that is exactly what happened in 2017.

 

But, if it is the drop and we are back into a bear market for BTC, ETH has some stuff going for it compared to the last bear market. I'll happily stake my ETH and wait until the next cycle while ETH slowly increases from becoming deflationary and moving to POS.

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GAME05 ACL Brewers

GAME05

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Boy you weren't wrong about the bump in the road. Cashed out about a week ago (if only I'd waited a week, but whatever). I saw the crypto market as a whole so steadily rising the past month, I figure things are a bit overvalued now, and for the most part I'm waiting until the next 20% correction.

 

Also moved over from Coinbase to Coinbase Pro before I cashed out just to save on the fees (no fee to transfer over). My password isn't "password" and the authentication stuff is on, but now I need to learn how to trade in and out of a wallet just for added safety.

 

Just picked up Wells-Fargo in my regular account since it's fallen the past few days. But otherwise hesitant to do much of anything on the market as I'm afraid of everything right now.

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thebruce44 First Round Pick

thebruce44

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Boy you weren't wrong about the bump in the road. Cashed out about a week ago (if only I'd waited a week, but whatever). I saw the crypto market as a whole so steadily rising the past month, I figure things are a bit overvalued now, and for the most part I'm waiting until the next 20% correction.

 

Also moved over from Coinbase to Coinbase Pro before I cashed out just to save on the fees (no fee to transfer over). My password isn't "password" and the authentication stuff is on, but now I need to learn how to trade in and out of a wallet just for added safety.

 

Just picked up Wells-Fargo in my regular account since it's fallen the past few days. But otherwise hesitant to do much of anything on the market as I'm afraid of everything right now.

 

You're completely out? Oh man, if you look at historical data, especially by month, things could just be getting started. I still think $200k+ BTC and $20k ETH is possible in this cycle and am holding to my original plan.

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GAME05 ACL Brewers

GAME05

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Speaking of the regular market, what are peoples' thoughts on the immediate future?

 

Michael Burry has heavily shorted the market including Arc's funds, Ray Dalio is more on the inflation train and Buffet is currently holding 31% cash which is extremely high for him.

 

I was considering dry bulk goods shipping, but so much of that depends on Corona lockdowns continuing/expanding, and I have a hard time seeing that happening.

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nodakfan17 First Round Pick

nodakfan17

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Moody’s has been forecasting a Q4 pullback in asset prices for a while. That includes both stock and real estate. I think it’s more of a correction than a recession. Their mid-term outlook is still bullish, but I sense some short term uncertainty.
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wallus First Round Pick

wallus

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It's funny I was going to bring this thread back to the top. I am wondering what ETFs you guys would recommend for income? I have some real estate that produces income but nothing out there right now seems like a good deal.
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nodakfan17 First Round Pick

nodakfan17

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It's funny I was going to bring this thread back to the top. I am wondering what ETFs you guys would recommend for income? I have some real estate that produces income but nothing out there right now seems like a good deal.

Look at PFF (iShares Preferred Stock and Income Securities ETF). The yield is 4.68%.

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wallus First Round Pick

wallus

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It's funny I was going to bring this thread back to the top. I am wondering what ETFs you guys would recommend for income? I have some real estate that produces income but nothing out there right now seems like a good deal.

Look at PFF (iShares Preferred Stock and Income Securities ETF). The yield is 4.68%.

 

That one was on my list that I was considering, thanks.

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superfly First Round Pick

superfly

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It's funny I was going to bring this thread back to the top. I am wondering what ETFs you guys would recommend for income? I have some real estate that produces income but nothing out there right now seems like a good deal.

Look at PFF (iShares Preferred Stock and Income Securities ETF). The yield is 4.68%.

 

That one was on my list that I was considering, thanks.

 

Often times individual preferred shares are much higher than that yield, and the only way they trade under par is if there is a crash or serious company stress. PMT/A one I have.

 

Bought some CRF this fall, not sure whether I’ll add, would prefer them do a rights offering to add. Also watching LULU, TSLA, DIS, TGT.

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LouisEly Wisconsin Timber Rattlers

LouisEly

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It's funny I was going to bring this thread back to the top. I am wondering what ETFs you guys would recommend for income? I have some real estate that produces income but nothing out there right now seems like a good deal.

Look at PFF (iShares Preferred Stock and Income Securities ETF). The yield is 4.68%.

I've keep some of my cash reserves in that fund since 2014. It's consistently been between 34 and 39 a share over the last five years, currently trading just under 39, except for when the market bottomed in late March of last year when it dipped to 27.75 at its lowest. It's about as low-risk as you can get while getting more than 1% yield.

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folly412 First Round Pick

folly412

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It's funny I was going to bring this thread back to the top. I am wondering what ETFs you guys would recommend for income? I have some real estate that produces income but nothing out there right now seems like a good deal.

 

Big fan of EVT. Pays ~6.6%, all of it qualified dividends, and has a weak correlation with the market so the price has also appreciated by about the same 6%+ historically.

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wallus First Round Pick

wallus

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It's funny I was going to bring this thread back to the top. I am wondering what ETFs you guys would recommend for income? I have some real estate that produces income but nothing out there right now seems like a good deal.

 

Big fan of EVT. Pays ~6.6%, all of it qualified dividends, and has a weak correlation with the market so the price has also appreciated by about the same 6%+ historically.

 

Thanks! I have not come across that one and will take a look.

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igor67 First Round Pick

igor67

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So perhaps a weird question, but since I don't normally sell individual stocks I'm looking for some insight. I'm helping a relative how owns a small number of shares purchased a long time ago. They have the original paper certificate, and the company is still in business. The share value is pretty modest so the total amount of money is pretty small. However the internet stories also indicate the company split and issued shares in a new company over a decade ago that my relative never received but should have, and both stocks having issued dividends for as many years as I can verify easily on the internet. My relative certainly hasn't gotten those at all for the last 10+ years, and may have never actually seen those. The stocks have been owned long enough I don't have easy access to a full picture of what happened to the stock that whole time.

The relative does not have any unclaimed property records, so any other thoughts on how to pursue missing compensation and ultimately sell off the shares?

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nate82 Wisconsin Timber Rattlers

nate82

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So perhaps a weird question, but since I don't normally sell individual stocks I'm looking for some insight. I'm helping a relative how owns a small number of shares purchased a long time ago. They have the original paper certificate, and the company is still in business. The share value is pretty modest so the total amount of money is pretty small. However the internet stories also indicate the company split and issued shares in a new company over a decade ago that my relative never received but should have, and both stocks having issued dividends for as many years as I can verify easily on the internet. My relative certainly hasn't gotten those at all for the last 10+ years, and may have never actually seen those. The stocks have been owned long enough I don't have easy access to a full picture of what happened to the stock that whole time.

The relative does not have any unclaimed property records, so any other thoughts on how to pursue missing compensation and ultimately sell off the shares?

 

You will have to find out who the transfer agent is for the company more than likely this will be computershare but there are others. This information is normally on the investor relations page of the companies website or you may have to call the companies investor relations.

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