Anyone else thinking about refinancing?

[jimcasada]

With the latest drop in interest rates l'm thinking that now may be a good time to refinance. Since the new higher standard deduction tax rates have basically killed off using my mortgage interest as an itemized deduction, I'm thinking about taking a $50k loan against my TSP and refinancing the rest. Can anyone recommend good VA loan refinancer?

[atcmisfit]

Just closed tonight at 2.75%, no points with BNC National Bank. I found them through nerdwallet.com on the top VA lenders tab. A bunch of Vets in my shop have also refinanced with them. So far everyone has had a good experience.

[bloobs]

With the latest drop in interest rates l'm thinking that now may be a good time to refinance. Since the new higher standard deduction tax rates have basically killed off using my mortgage interest as an itemized deduction, I'm thinking about taking a $50k loan against my TSP and refinancing the rest. Can anyone recommend good VA loan refinancer?

i think it will be this low or even lower for years to come. no rush.

assuming your tsp didnt take a dump so far this year, if you take the tsp loan out now with a 3 year repayment plan, it may fit in nicely since your repayments would be buying back CSI shares cheap.

[harryface]

I would suggest NOT taking a loan out against your TSP. With interest rates between 2.75-3% for a VA loan you are better off to just borrow the whole amount. Think about the income that you will make on that $50k over the next 5 years or 10 years.

[jackhannah]

Don’t do a TSP loan! You’re taxed twice. You pay the loan back with income that has been taxed and then you’re taxed when you take the money out in retirement.

[jlozano042]

We got another thread about this, we have a few folks (including myself) that are closing soon.

[mjedlin66]

Don’t do a TSP loan! You’re taxed twice. You pay the loan back with income that has been taxed and then you’re taxed when you take the money out in retirement.

No, you are not taxed twice.

Jim and Jill are neighbors. Both want to build a $1000 shed.

Jim builds his shed with money that he earned in his paycheck. He already paid income tax. So he just takes $1000 out of his pocket and builds his shed. The shed is a taxxed asset.

Jill borrows $1000 from her Traditional TSP. She builds her shed. The shed was built with pre-tax dollars. While repaying her $1000 TSP loan, she pays income tax. The same amount of income tax that she should have paid on her shed.

It works for Roth balances as well.

Double-tax on loans is a myth. You do get double taxxed on the loan interest. But not the principle.

[jimcasada]

Here's my thinking... I plan to retire within 3 years and TSP will give you up to $50k loan with no questions and added expenses or fees added, but it has to be paid back in 3 years. That would knock off $50 from my refinance amount and set me up for a nice low monthly mortgage payment when I do retire, and I can afford to do this now while I'm working. That's nonsense about being taxed twice, you're only using using your TSP as collateral to in effect take out a 0% interest loan. The main drawback is that you would losing the gains that your money could have been making if you had left it in any other fund than -G-, because the collateral amount has to stay in -G-. I personally don't expect much out of the markets for the next couple years or so. Has anyone had any experience with Veterans United? They claim that they can give me 2.75%. I'm thinking if I can get something firm in writing saying that, maybe I could take that to my current mortgage provider Navy Federal and get them to reduce my current mortgage? Has anyone tried that? Right now, my financial situation has never been better with 800+ rating from all three credit bureau's.

[Scorpio70]

If you had $50K in the S&P 500 in 2008, it would have been worth $118K by 2018. No one can predict the future. If I borrow someone else's money at 2.75%, and pay it back over time, my $50K has a chance to out perform the 2.75% I am paying the lender. As the Government prints more money, it is worth less, which means you will need more of it. By keeping your money invested, once the smoke clears, you will have a shot of making that money work for you. The lender will be stuck with a 2.75% return on their money. The opportunity cost of locking up $50K into a G fund rate will only serve to put you on par with the lender. You want to be smarter than the bank.

[Jvanhulle7]

I just refinanced as well. Got locked at a 2.75%. Saving me a ton of money monthly in comparison to my previous 4.125%.

[jlozano042]

I just refinanced as well. Got locked at a 2.75%. Saving me a ton of money monthly in comparison to my previous 4.125%.

BOOM

[jimcasada]

To Scorpio70:
I'm just talking about a 3 year TSP loan, not 10 years. If you had $50k in the S&P 500 in early 2008, you actually would have been considerably in the hole by 2011. Also as you pay the loan back, an equal amount of the collateral funds locked in -G- is returned back your general funds (unless they have changed something since my last loan about 10 years ago). For example, after 1 1/2 years, 25k would have been returned to do whatever you want with it.

[Scorpio70]

You could dollar cost average your money to any of the funds, and you are the lender. Also, you are paying yourself back at the G Fund rate, plus whatever gains you may garner in the near term. Granted, it's not a terrible idea for a short term loan. Using the three year term for the C Fund which is where we would have had $50K in 2008. It was down 37% in 2008, so while indeed a bad year for the S&P 500, it rebounded 43.86% by 2011. Not exactly in the hole, but only a 6.86% return on the money which admittedly is nothing to crow about. It is possible, by borrowing the money and paying it back in a cataclysmic down year you could be protecting it. This could be true if the remainder 2/3rds is paid back in recovery years.....OMG I think I agree with you........Damn, and I hate borrowing money.