Completely inappropriate question about financial matter

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One more question about...teddys

Quote: JerryLogan

If the "OP" isn't, the "OP" wouldn't make such an amateurish move as asking a bunch of unknowns advice on how to run her finances.

"Amateurish move"?
There is more collective mathematical brain power on this board than you could ever find at a local financial advisement business. Does every poster fit this description? Of course not. There will be some questionable advice, some really bad advice, but there will also be some great nuggets too. Asking questions and seeking advice from this board as your sole reference would be inadvisable. However, using this board as a supplement to other advice, or as a tool for learning more, is a viable option, and IMO, is a smart move.

Quote: JerryLogan

Yes, it's always very difficult coming to grips with the fact that the point Jerry Logan made was correct in every way.

Appeal to Authority.
Possibly Begging the Question.
As well as Circular Reasoning, talking about yourself in the third person and changing the subject.

Quote: thecesspit

Appeal to Authority.
Possibly Begging the Question.
As well as Circular Reasoning, talking about yourself in the third person and changing the subject.

Because it's programmed that way. You are conversing with an argument bot. Recognize it as inanimate text and move on.

Quote: RaleighCraps

"Amateurish move"?
There is more collective mathematical brain power on this board than you could ever find at a local financial advisement business. Does every poster fit this description? Of course not. There will be some questionable advice, some really bad advice, but there will also be some great nuggets too. Asking questions and seeking advice from this board as your sole reference would be inadvisable. However, using this board as a supplement to other advice, or as a tool for learning more, is a viable option, and IMO, is a smart move.

You didn't get it. All any poster does is lay themself out for criticism and possibly much more, if some of this so-called "expert financial advice" as you purport it to be, is adhered to by the requestor, acted upon as such, and the bottom falls out--regardless if other advice comes her way.

I don't go to my dentist, whom I've known for almost 15 years, for advice on buying a new car. And one certainly doesn't go to a bunch of unknown personalities on a GAMBLING-associated forum and ask for advice on how to stay out of foreclosure, or whatever problem she's hiding.

Jerry, do you think you could quit being a jerk when you post on this board? You'll notice when you posted a question you received several replies on point, without arguments, insults or political propaganda. Now, if others here treat you with respect, can't you do the same?

If you can't, then go away.

Quote: Nareed

Jerry, do you think you could quit being a jerk when you post on this board? You'll notice when you posted a question you received several replies on point, without arguments, insults or political propaganda. Now, if others here treat you with respect, can't you do the same?

If you can't, then go away.

The reply to "Amateurish" was hardly on point. Indeed, my response to it was a more spot-on answer while completely disarming the argument with time to spare. If you disapprove of it or don't like it, I'll date your sister for a night and I promise, you'll forget all about it.

I want to thank many here for their opinions and sharing their experiences. I have listened to the advice given here, the advice of three financial advisers, including my adviser at Fidelity and my accountant. I have also done some lengthy spread sheet computations on several scenarios.

It turns out to be a cash-flow positive decision to re-fi $417k out of the $548k at 4.0%, 0 points, 15 years, and pay the difference of $131k in cash. That is, I make more by taking the re-fi in this way than I get if I cashed out the house by paying it off. This includes all tax implications, state and federal.

I can understand, after the intense work I've done on this problem, why it really is a genuinely interesting problem. It has a solution that is unique for each individual based on a number of elements, some quantifiable, some not. In my case, I stuck to the purely quantifiable elements.

Again, thanks to all those who made a positive contribution to this discussion,

--Dorothy

Hi Dorothy,

I'm curious how a monthly mortgage payment, of which a large portion is going toward interest (at least initially), turns cash flow positive. It seems counterintuitive. Without going into specifics, are the tax benefits plus guaranteed return on the investment of the mortgage money putting you ahead?

Quote: Ayecarumba

Hi Dorothy,

I'm curious how a monthly mortgage payment, of which a large portion is going toward interest (at least initially), turns cash flow positive. It seems counterintuitive. Without going into specifics, are the tax benefits plus guaranteed return on the investment of the mortgage money putting you ahead?

These are the basics. The complication arises because of amortization. The numbers below are not static over the life of the loan.

If I take that $400k loan, then I am paying $2950 each month to the bank.

Out of the $2950, $1625 goes to principle, which is an equity line item, leaving $1325 in interest.

Out of the $1325 in interest, which is tax deductible (I am in the 33% bracket), I get $442 back in taxes. That leaves a payment of $883.

Now, I have that $400k to invest as a result of taking the mortgage. Say I get 3% tax free in state municipal bonds. That's an annual income of $12000 from the $400k, or about $1000 per month in income.

I now MAKE $117 per month in profit by taking the loan.

The key point is how much I can make in tax free municipal bonds. At 2% I am losing, at 3% I am winning. I buy shares of FCTFX which has paid over 3.5% for as long as I remember.

FCTFX CHART

Now, if I pay off the loan, then that same $400k is with the bank and I don't get any benefits from investing it, or tax breaks, or equity increase.

--Dorothy