The Investment Thread

[Fear The Chorizo]

Anyway, that panic on Monday was a good money making opportunity...I picked up some $SCHW at a discount and it's already up 12%. 

I hope you've already sold to lock in that profit

[MrTPlush]

So I decided to try and rid myself of paying PMI. In reality my house has gone up in value that it is easily valuable enough to have 80% or less for LTV. I’d say something like 70%. So I went ahead and paid the $100 for a BPO (a realtor basically does a competitive market analysis). Guy comes, basically said it should easily be what it needs to be, but he would shoot for decently higher and see what the mortgage company does. Which tells me the mortgage company doesn’t just accept what the realtor sends them.

So I get called today and no joke the lady tells me that after their review/analysis the LTV was 81%.

Yes, I can pay down the like $5k difference, but come on. That is ridiculous and has to be done intentionally.

[zurch1818]

8 minutes ago, MrTPlush said:

So I decided to try and rid myself of paying PMI. In reality my house has gone up in value that it is easily valuable enough to have 80% or less for LTV. I’d say something like 70%. So I went ahead and paid the $100 for a BPO (a realtor basically does a competitive market analysis). Guy comes, basically said it should easily be what it needs to be, but he would shoot for decently higher and see what the mortgage company does. Which tells me the mortgage company doesn’t just accept what the realtor sends them.

So I get called today and no joke the lady tells me that after their review/analysis the LTV was 81%.

Yes, I can pay down the like $5k difference, but come on. That is ridiculous and has to be done intentionally.

I feel for you.  That sucks.  In my opinion, PMI is a complete scam.  I feel the mortgage company shouldn't be allowed to pass that cost onto the homeowner.  I'm guessing when a sports contract gets insured, the player isn't the one paying the premium, the team is because they are also the beneficiary if you default.  If they think you aren't trustworthy to buy the house with less than 20% down then they shouldn't give you the mortgage.  There are plenty of mortgage brokers out there that will give you the loan, so it should be their lost.  If they do give you the mortgage, the insurance should be something they should have to cover with the interest they are receiving from you.

[MrTPlush]

35 minutes ago, zurch1818 said:

I feel for you.  That sucks.  In my opinion, PMI is a complete scam.  I feel the mortgage company shouldn't be allowed to pass that cost onto the homeowner.  I'm guessing when a sports contract gets insured, the player isn't the one paying the premium, the team is because they are also the beneficiary if you default.  If they think you aren't trustworthy to buy the house with less than 20% down then they shouldn't give you the mortgage.  There are plenty of mortgage brokers out there that will give you the loan, so it should be their lost.  If they do give you the mortgage, the insurance should be something they should have to cover with the interest they are receiving from you.

I’d love to know how common it actually is for someone to just pack up their house and decide to just quit on their mortgage, thus making PMI insurance actually get triggered. 

Don’t they do a valuation if you try to use equity in your house for a loan? I should apply for one, I bet the valuation would magically be $20k more for that.

Is what it is I guess. My credit was so high my PMI is only like $70 a month. I don’t really want to yank out a bunch of money  from my emergency fund to buy out the necessary equity to be at 80%, but I figure if some emergency happens to need that money I could trot down to the bank, get a personal loan for 13% interest, and still save thousands compared to the $5k or so left in PMI payments I would have been making.

Also, my favorite part of this entire thing, the realtor sent out to do the BPO hasn’t sold a house in over a decade. Sure sounds like a guy with a good grasp on local market conditions. Lmao

[owbc]

Title insurance is even more of a scam IMO. 

[zurch1818]

1 hour ago, owbc said:

Title insurance is even more of a scam IMO. 

Oh yea...title insurance, that is definitely a bigger scam. 

When we refinanced our house, I don't recall getting our house getting valued again.  They only looked at what the remaining balance was on the mortgage.  I don't know if that was because I refinanced less than 2 years after we closed and the original one that we did was close enough.  We refinanced in the fall of 2020, so maybe COVID had something to do with this too.  I'm guessing refinancing probably isn't a very popular thing to do these days.

In the refinance, I was also trying to get the monthly payment as low as possible, so we actually brought money from a recent bonus to the refinance closing.  It turned out that I received some inheritance a little over a year later and it was enough for us to feel comfortable draining some of our emergency fund down and pay off the house.  I figured I wouldn't need as much of an emergency fund with a paid for house.  When considering closing costs, we saved a whopping $157.  We showed them who was boss.

If you have a really healthy emergency fund, I would recommend doing some math and possibly throwing some of it at your house just to increase how much goes to principal (besides ridding yourself of PMI).  You won't see a huge gain in interest saved until the mortgage gets paid off...but it could definitely save you thousands of dollars in interest alone.

[igor67]

Title insurance well, let's just say that I have mixed feelings. I did actually end up using mine, and it worked great and I avoided what I'm sure would have been a few thousand dollars in legal fees. The obnoxious part was that the title search did not find the mistake until the second time we had refinanced. The person we purchased the house from had bought it in foreclosure, and that foreclosure hadn't been processed correctly. So it took 4 times total and almost 15 years for the title search to finally notice the error. So very mixed feelings about the value of that fee...

[Fear The Chorizo]

12 hours ago, MrTPlush said:

So I decided to try and rid myself of paying PMI. In reality my house has gone up in value that it is easily valuable enough to have 80% or less for LTV. I’d say something like 70%. So I went ahead and paid the $100 for a BPO (a realtor basically does a competitive market analysis). Guy comes, basically said it should easily be what it needs to be, but he would shoot for decently higher and see what the mortgage company does. Which tells me the mortgage company doesn’t just accept what the realtor sends them.

So I get called today and no joke the lady tells me that after their review/analysis the LTV was 81%.

Yes, I can pay down the like $5k difference, but come on. That is ridiculous and has to be done intentionally.

That's ridiculous - I went through a similar ordeal a couple years ago, but was successful using the process our lender had in place with having an assessment done by a licensed assessor of their choosing.  If I remember right, that assessment fee was between $300-$500 - our lender gave us the option to either pay it in full or tack it onto the load principle, which we promptly paid in full.

Getting PMI off our monthly books was definitely a plus - it's helped us not be too impacted by increasing homeowners insurance and property tax increases that our escrow payments have tried to keep up with.  This time of year is always a fun one waiting for the annual escrow analysis letter from the lender stating how much more our monthly mortgage payment is going to be...smh.

[MrTPlush]

2 hours ago, Fear The Chorizo said:

That's ridiculous - I went through a similar ordeal a couple years ago, but was successful using the process our lender had in place with having an assessment done by a licensed assessor of their choosing.  If I remember right, that assessment fee was between $300-$500 - our lender gave us the option to either pay it in full or tack it onto the load principle, which we promptly paid in full.

Getting PMI off our monthly books was definitely a plus - it's helped us not be too impacted by increasing homeowners insurance and property tax increases that our escrow payments have tried to keep up with.  This time of year is always a fun one waiting for the annual escrow analysis letter from the lender stating how much more our monthly mortgage payment is going to be...smh.

I could have done a formal appraisal for $500, but I didn’t think it was going to be any more advantageous over a $100 BPO. At the end of the day they estimated the value at a 13% increase the last two years. Considering Wisconsin has seen 28% home value increases the last two years and I did about $10k in improvements their estimate seems pretty far off.

I didn’t receive an escrow increase letter this year. Though that is only because last year they increased it assuming property taxes were going to go up a bit and they went up like $50. 

[LouisEly]

On 3/29/2023 at 10:25 PM, owbc said:

Title insurance is even more of a scam IMO. 

Hopefully blockchain will soon take care of that.

[wallus]

My parents run a few businesses where they have to have a fair amount of liquidity/cash on hand for investing into new equipment etc. I have been trying to get them to get 4%+ on this money rather than accept the near zero percent they are getting from their banks right now. So far they have refused.

On the other hand, they make a big deal when gas goes up a dime and that stamps are going up 2 cents. I should point out to them that how they are managing their money is costing them thousands of dollars and gas prices and stamps should be the least of their concerns.

[igor67]

Especially in this thread it is easy to forget a variety of concerns about not chasing the highest yields, but 6 month CDs are getting close to 5% now, and even normal money markets are getting close to 2% if you think you'll need the cash sooner. It is surprising they wouldn't have caught on to the impact of rates when you have good sized balances. 

[LouisEly]

On 2/22/2023 at 10:57 AM, owbc said:

Do the Millennials and Z's get blamed for everything? 

I was just in Hawaii and the average age of the tourist there is about 60. Very few people under 40 have enough time or money to do anything other than basic travel. 

I don't have social media, but I think what you're seeing are the "Influencers", who are getting paid to do all of that stuff by whoever sponsors then. 

 

[Samurai Bucky]

NVIDIA for the win?  My business partner bought NVIDIA a long time ago when it was 10 or 20 per share.  HUGE portfolio now.

AI stocks and funds are going to be on the upswing.  Micron, NVIDIA, Broadcomm...

[wallus]

My friends that have been bears for a while are in shambles right now.

[PlayerHader]

On 6/17/2023 at 12:06 AM, wallus said:

My friends that have been bears for a while are in shambles right now.

Hope they weren't shorting the market...

I do think the bear market comes Q4/Q1 next year, though. Anyone use 42macro as a resource?

[wallus]

23 minutes ago, PlayerHader said:

Hope they weren't shorting the market...

I do think the bear market comes Q4/Q1 next year, though. Anyone use 42macro as a resource?

They keep pushing the recession back and eventually they will be right.

[homer]

5 minutes ago, wallus said:

They keep pushing the recession back and eventually they will be right.

https://finance.yahoo.com/news/a-reliable-indicator-says-the-next-recession-might-be-3-years-away-morning-brief-100045316.html

What if that reset pushes a recession… all the way to 2026?

[PlayerHader]

14 hours ago, wallus said:

They keep pushing the recession back and eventually they will be right.

42macro? It actually called the recent bull market. 

[Fear The Chorizo]

On 6/28/2023 at 8:45 AM, homer said:

https://finance.yahoo.com/news/a-reliable-indicator-says-the-next-recession-might-be-3-years-away-morning-brief-100045316.html

What if that reset pushes a recession… all the way to 2026?

When this all finally goes south, and it will, it's going to go south painfully fast.  A recession hasn't yet techincally happened, but neither has substantial growth/expansion - to me it feels like treading water out in the middle of an ocean with a chunk of floating debris propping you up...ok for now to survive, but you're still in the middle of an ocean full of sharks with very limited options on how to improve your situation.  Bank balance sheets are still in very rough shape from decisions made several years ago when the cost of debt was basically nil - now the current interest rate outlook makes it all but impossible to clean up.

The last bad recession driven by normal economic ebbs and flows was caused by the housing market bubble, this one will be caused by commercial real estate and the current bloated personal credit card debt bubble - at some point all the levers currently propping up a sputtering economy in the face of rising interest rates and persistent inflation are going to give, and there isn't much of anything left to soften the blow.  

[owbc]

3 hours ago, Fear The Chorizo said:

When this all finally goes south, and it will, it's going to go south painfully fast.  A recession hasn't yet techincally happened, but neither has substantial growth/expansion - to me it feels like treading water out in the middle of an ocean with a chunk of floating debris propping you up...ok for now to survive, but you're still in the middle of an ocean full of sharks with very limited options on how to improve your situation.  Bank balance sheets are still in very rough shape from decisions made several years ago when the cost of debt was basically nil - now the current interest rate outlook makes it all but impossible to clean up.

The last bad recession driven by normal economic ebbs and flows was caused by the housing market bubble, this one will be caused by commercial real estate and the current bloated personal credit card debt bubble - at some point all the levers currently propping up a sputtering economy in the face of rising interest rates and persistent inflation are going to give, and there isn't much of anything left to soften the blow.  

Yeah I tend to mostly agree with this. What else can corporations do to maintain or further grow their massive profit margins? They already did mass layoffs and jacked up prices to the moon. It's honestly incredible that demand hasn't softened much yet given that wage growth has been below inflation for a while now. I have zero sympathy for the banks, everyone knew that interest rates would be going back up after the pandemic. 

Here's at least a bit of optimism. The US is having the strongest post-pandemic recovery in the G7 -- lowest inflation, greatest increase in GDP. We're doing pretty good relative to our peers, and we've finally made some progress on things that could really screw us over like transitioning to green energy and bringing some manufacturing back to the US. 

I've decided to leave most of my liquid investments in money markets for now, it's too hard to say no to a guaranteed 4-5% return given the continuing uncertainty. 

 

[wallus]

Similar comments from my friends that are Bears, "it's coming and it will be bad!"

If unemployment gets above 5%, then I will start to listen to Bears.

[Fear The Chorizo]

6 hours ago, wallus said:

Similar comments from my friends that are Bears, "it's coming and it will be bad!"

If unemployment gets above 5%, then I will start to listen to Bears.

Assuming the labor participation rate remains stagnant at a level well below where it was before the pandemic, if the unemployment rate of people actively trying to work crawls back up over 5% it's going to happen well after you'd probably start listening to the Bears you know.

 

 

 

 

[wallus]

10 hours ago, Fear The Chorizo said:

Assuming the labor participation rate remains stagnant at a level well below where it was before the pandemic, if the unemployment rate of people actively trying to work crawls back up over 5% it's going to happen well after you'd probably start listening to the Bears you know.

 

 

 

 

Nah, I would take an argument that the student loan repayment is going to have a bigger effect than unemployment/participation rate. We are FAR away from worrying about that.

[nate82]

7 minutes ago, wallus said:

Nah, I would take an argument that the student loan repayment is going to have a bigger effect than unemployment/participation rate. We are FAR away from worrying about that.

Student loans are not going to be as big of an issue as some think it will be.  The ones that were going to default on their loans were going to default on their loans anyways.  Resuming the payments doesn't change that.  The financial institutions that service these loans will be hit hard but after a quarter everything will go back to normal. 

Now if you say the combination of inflation still being high, unemployment/participation rate and student loan repayment coming back then yes all of those things combined are a cause for concern.  Individually other than inflation, these are just blips in the economy. 

Inflation is still the number one concern with everything else well below.