Are You Nearly Done Paying Off Your Mortgage?

If you have a prepayment penalty, you also have to ask your lender if they're willing to wave that penalty. Just like you hopefully shopped around for that first mortgage, you're going to want to do the same thing with shopping for a refi. There's some other things that are involved in this that aren't, like specifically fees related, that actually do factor into the overall cost of this too. We we talk about credit karma has entered the chat, absolutely.

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When I did a rent (and invest) vs. buy analysis back in January 2021 with a 2.6% interest rate, the results were pretty neck-and-neck. As rates climbed this year, I figured it would be fun (I’m using the word “fun” loosely) to revisit the exact same scenario with the higher rate.

Depressingly, when we recorded this episode just last week, the rate was 5.95%. In the course of a single week, it’s now surpassed 7% as of publish (9/27/2022). How have the rates changed the math now and how does one realistically budget for a median home in the US today with 6+% 30-year fixed rates? Let’s find out.

I'm also joined by Andy Taylor, VP & GM of Credit Karma Home (https://www.creditkarma.com/) to discuss breakeven costs, refinancing, and borrowing against home equity.

Episode transcriptions can be found at https://www.podpage.com/money-with-katie-show/.

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Mentioned in the Episode

Summer 2022 interest rates: https://www.forbes.com/advisor/mortgages/mortgage-rates-08-31-22/
Early 2021 rent vs. buy analysis: https://moneywithkatie.com/blog/when-the-math-supports-buying-your-primary-residence-instead-of-renting
"Average net worth of homeowners," from CNBC: https://www.cnbc.com/select/average-net-worth-homeowners-renters
Quit Like a Millionaire by Kristy Shen: https://www.penguinrandomhouse.com/books/592323/quit-like-a-millionaire-by-kristy-shen-and-bryce-leung-foreword-by-jl-collins/
Data on home ownership averages: https://www.ngpf.org/blog/economics/qod-how-many-years-has-the-typical-american-homeowner-been-in-their-current-home/
Average median home value, from The Motley Fool: https://www.fool.com/the-ascent/research/average-house-price-state
Private mortgage insurance: https://www.investopedia.com/mortgage/insurance/
Average homeowners insurance: https://www.investopedia.com/insurance/homeowners-insurance-guide/
Average property tax rate: https://smartasset.com/taxes/texas-property-tax-calculator#UMznyF9L22
Average mortgage rate for 30-year term: https://www.bankrate.com/mortgages/todays-rates/mortgage-rates-for-monday-july-25-2022/
Amortization calculator: https://www.bankrate.com/mortgages/amortization-calculator/
Paying interest first in mortgage payments: https://www.investopedia.com/ask/answer/07/mortgagepayments.asp
Average broker's commission: https://www.ownerly.com/real-estate/average-commission-for-real-estate-agent/
Average closing costs: https://themortgagereports.com/35800/guide-to-mortgage-closing-costs-what-average-mortgage-costs-are-and-how-to-keep-yours-low
Average 3% rental increases: https://www.apartmenttherapy.com/average-rent-increase-percentage-268659
IRS Standard Deduction: https://brighttax.com/blog/irs-standard-deduction-expats
Rule of 150: https://www.businessinsider.com/renting-versus-buying-a-house-advice-math-rule-2019-9
28/36 Rule: https://www.investopedia.com/terms/t/twenty-eight-thirty-six-rule.asp