Ask MetaFilter questions tagged with finance and interest

Pay down the mortgage?

acoutu — Fri, 13 Nov 2009 13:19:11 -0800

Should they pay down their mortgage? My friends, who think I'm a financial guru, have come to me seeking some advice on their mortgage. However, while I have an opinion, I thought I'd ask the folks here at AskMefi too.

Should they pay down their mortgage?

Due to several unexpected windfalls, my friends have about $100k in the bank. They have earmarked $25k for retirement savings, general savings, a trip, and so on. They have ample emergency savings and decent retirement savings funds already, as well as college savings. Their car is paid off. They have no debt outside their mortgage. They live on one income and use the other to pay down their mortgage. They have 2 children and one parent works part-time, while the other has a very good job. When the other parent returns to f/t work, their income will rise substantially, but they are already in a very comfortable household income bracket.

My friends can pay up to $65k as a balloon payment on their mortgage each year. They have previously made several balloon payments, but none this year.

Their current *fixed* rate is 5.89%, with 2.5 years left in the term.
Their marginal tax rate is around 35-40%.
Their mortgage payments are around $2050 a month.
The outstanding balance is now $275,000, down from $350k when they bought 2.5 years ago.
Their condo is worth around $600k and is in downtown Vancouver.

If they break the mortgage, they would pay an interest rate differential of about $17k.

They could refinance at around 4% fixed or 2.2% variable, give or take.

They have excellent credit.

My friends think they should pay down their mortgage by $65k, so that they get a 5.89% return with no tax. This will reduce the burden of a mortage (in a city where a house is $1M) and also mean that, when the term is up for renewal in a few years, they can shorten up the amortization or else benefit from much lower payments. They don't think it makes sense to break the mortgage ,since, over the course of the entire mortgage, they would actually save much more by applying the $17k penalty against the mortgage instead. Besides, they have money sitting in the bank.

Does it make sense to pay down the mortgage by $65k?

Thanks in advance.

Savings for convenience?

Raze2k — Tue, 22 Sep 2009 09:55:09 -0800

Should I bother with a savings account? I recently dug myself out of credit card debt and for the first time in years, I'm finding myself no longer living check to check. I've continued to use one of my cards for most of my expenses, partially for convenience, but mostly for the cash back rewards now in tandem with Chase Blueprint (specifically 0% APR on all purchases, as long as I completely pay my bill each month with extra points for having a Chase checking account).

Having said that, I now find the balance of my checking account growing and I feel as though I ought to be earning interest. The sticking point here is that I need the money to be very liquid and easily accessible. Most of my accounts are with Chase and I'd like to keep it that way. Unfortunately I don't have a high enough balance to qualify for their interest-bearing checking accounts and the interest on their savings accounts is currently a pathetic 0.01%.

Since I'm not sure of my financial needs over the next year and I want to keep my funds readily available at a moment's notice, is it worth bothering with a Chase Savings account -- if only to provide the convenience of separating theoretical savings from day-to-day funds?

I'm not at a point where I feel comfortable transferring funds to an online-only bank and, admittedly, convenience is huge to me. Are there any down sides to opening a new savings account (other than the obviously terrible interest rate)?

Note: Chase Savings accounts are free as long as you have a minimum balance of $300.

Why Invest in Negative Interest Rates

jsonic — Tue, 09 Dec 2008 13:08:13 -0800

Hey Financial People: The interest rate on 3 month Treasury Bills just went to -0.01%. Why would anybody, or any institution, buy them? Why not just hold on to your capital as cash? Or does a negative interest rate not mean what I think it means?

How can I lower my interest rates on my credit card and mortgage?

Anonymous — Wed, 08 Oct 2008 17:54:17 -0800

How can I lower my interest rates on my credit card and mortgage? Greeting and salutations fellow MeFites,

Is it likely, possible, or wise to try to persuade my creditors (credit cards and mortgage company) to lower my interest rates by just asking them nicely. I hope this questions doesn't sound too naive or foolish, so please save the lecturing:)

First some background. I have a pretty decent amount of debt. Roughly about 23K in debt, all with 16% apr and up, on 5 different cards...(I know, I know!) My mortgage is 209K with a 5.99% 30 year fixed. I rent out one side to a tenant and live in the other side. My income has ranged from 65- 45K in the last three years. This year, however doesn't looks so good. And with all of this economic turmoil it doesn't look better for the near term. Or the far term for that matter!

I work in the commercial construction field and needless to say, things have been drying up as of late. Work is pretty slow, but It has given me the opportunity to peruse training in another line of work that will hopefully turn out to be more lucrative in the long run. However, in the short term, I have not been this broke in years! I pretty much have used up any saving that I had this year because of lack of work and the remodeling my house/duplex.

How likely is it that my credit card companies will lower my interest rates If I just ask. I have only been more than 30 days late on 1 credit card in the last 7 years, and that was three years ago. Not that it matters, but it wasn't that I couldn't pay it I just made a mistake on an automatic payment option. I have missed the occasional due date now and then, but the payment is never more that a few days past due.

Any advice on how I should go about to do this with my credit card companies? Has anyone convinced their CC companies to work with them without being bankrupt or something? If so, what tactics have worked for you?

Also, Is it likely, or even at all possible that I get my mortgage company to lower my interest rates WITHOUT having to refinance my loan. I have never been late with a payment with my mortgage since I bought my duplex two years ago. As I have said, I have a 30 year fixed at 5.99.

Now having said that, I imagine that my credit score isn't great because of my debt load. Any ideas about how to go about getting my interest rates lowered on. I'm not above begging, btw. What ever works!

Thanks,

Anonymous. AKA, Ol' Debtty Bastard

p.s. I dont know if this info will help but, my mortgage pmt is 1791.00 and all of my card totally to about 580.00 a month.

What's the safest possible thing that I can do with my money?

Afroblanco — Thu, 20 Mar 2008 12:18:24 -0800

What's the safest possible thing that I can do with my money? Anyone who's seen me around the finance threads knows that I take bearishness to an extreme. Having witnessed the 2000 tech crash, I have no faith in the stock market or the US economy. I keep all of my money (USD) in a savings account. However, with the recent financial turmoil, I have a few questions :

1) Is it conceivable for the FDIC to fail?
2) If so, is there a place where I can put my money that will be safer than a savings account?
3) What's the safest, most risk-free way for me to save money and not get killed by inflation and the tanking US dollar?
4) If there is a safe way for me to save money and not be punished by inflation and the depreciating dollar, is there a way that I can do this without having to stress out and micromanage my finances? I don't want to be checking the finance page and making adjustments every day.

One thing that I must ask of you all - please do not turn this into a political debate. I know that issues of economics are often politically charged, but I ask you to please not address that aspect of the situation. Also, please take it easy on me. Even though I follow finance news, I've never done any investing or money management other than socking money away in my savings account. I'm a n00b, I admit it, so please don't talk down to me.

Any links to relevant articles or informational resources - especially those readable to the layman - will be appreciated.

Thank you.

Negotiating at end of teaser rate

acoutu — Mon, 18 Jun 2007 14:52:38 -0800

Do most people try negotiating near the end of a teaser rate? When we bought our home last year, we went with a one-year teaser rate, to be followed by a variable or fixed rate based on prime minus X. The time on the teaser rate will expire in a few months. Someone I met recently suggesting negotiating before locking in -- she works for a branch of our bank and said we should try to get a better rate, now that we've had a mortgage with the bank for a while. I was wondering how to go about doing this and whether it is normal. (I'm no longer in touch with this person, who I met during a course.)

I am aware of the benefits/drawbacks of teaser rates, so no need to get into that. However, I did wonder whether others had tried negotiating for a better rate as their teaser rate came to an end. I tried talking to my mortgage broker, but he said those discussions would be between us and the bank, as he's out of the loop now.

I know how to project the costs of switching to another bank vs staying with the rate at my lender. I suppose I could use that as fodder. But other suggestions are welcome. I guess it never hurts to ask, though.

I've paid off all my credit cards.... now what?

weiler63 — Wed, 07 Mar 2007 02:11:54 -0800

I've paid off all my credit cards.... now what? Over the past 6 months. I have managed to zero out the balances of all my CC's down from 10k.

Any help as to how long before this gets reflected in my credit score, and what if any tips you have for boosting that score.

If it helps, I'm keeping the lines open, and use them sporadically for small item purchases. Thanks in Advance. It is certainly a great day when you look online and see all zeros in the cc balances.

--Credit Debt Free

Where can I find historical fed statements?

GregX3 — Wed, 31 Jan 2007 15:47:20 -0800

Every time the US federal reserve meets to decide on changing interest rates, the news articles say something like "in their statement the fed says ...". So my question is where can I find a listing of the statements for the past 10 or 20 years? I'd like to see how the words change over time. My ideal answer if a link to a webpage that has them somehow. But just knowing the official term for these statements or if they get published officially anywhere would be immensly useful.

Negotiating my variable rate mortgage

acoutu — Wed, 02 Nov 2005 14:36:28 -0800

Can I renegotiate my variable rate mortgage? I have a variable rate mortgage. My rate was 3.65% for the past three months. I just got a notice saying it is now 4.15%, which is .6% below prime. However, the posted rate at the bank is 3.95%. Can I ask for this rate and, if so, how would I do that in the most effective manner?

It bugs me that the bank bumped my rate .5% when the Canadian Bank Rate has only gone up .25% and my bank is advertising that their variable rate is 3.95%. Some other banks have 3.95% rates -- I could move to another bank ($250 discharge fee + $2 months of interest), causing my bank to lose my business.

Any suggestions for negotiating my 1.5-year-old variable rate mortgage?

Which loan should I pay down?

letitrain — Thu, 12 May 2005 00:27:45 -0800

I have two loans, and an extra $250/month to pay them down, but I don't know which one to choose. *Bonus question: should I pay them down? The first is a student loan with a balance of $14,500 and a variable interest rate of 3.37%, and the second is an auto loan with a balance of $8250 and a fixed interest rate of 4.75%. Both have a $250 minimum monthly payment. I can pay an extra $250/month on top of the combined $500 monthly bill. Which one should I pay down first?

*Bonus: should I be paying the loans down or saving/investing the money? I pay about $40/month in interest for each account (of course, getting smaller every payment). Is there any reasonably safe investment that could beat lowering the interest? This stuff makes my head hurt.

I don't have any "portfolio" other than a two-month savings safety net and three small IRA rollover accounts.

Economics Question

specialk420 — Sat, 20 Nov 2004 08:05:33 -0800

"The Fed chief also seemed to be practically guaranteeing higher interest rates, saying that investors who weren't hedged against a rise were "desirous of losing money."."

these questions have been asked before, but any further thoughts on a hedge for dollar positions and increasing interest rates?

First Credit Card

asterisk — Sun, 24 Oct 2004 18:10:25 -0800

Credit Card Filter. I’m a college student on the verge of graduating this spring. I have never had a credit card. Should I have one to start to establish a good credit rating for the future? [mi] I have gotten through college with student loans and working two part time jobs. I am good with finances and have never needed a credit card but now that I’m about to graduate and see a car and maybe a house in the next 5 years, should I start trying to establish a good credit rating or is that not necessary?

I have a $1k purchase coming up which I can afford to purchase outright but it seems like it would be a good first credit purchase to pay off in a few months to show a good payment record. I honestly don’t know much about credit cards beyond how they work, are there any neutral sources for good information?