Monthly Archives: October 2013

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Oh Snap!So, we’ve yet to even hear back from TD regarding our loan application and my wheels are already spinning.

Back in 2010, we had $40k worth of work done on the house. We’d saved up a bit — maybe $15k? You could look it up on here — but most of financing came in the form of 0% credit card offers.

In the end, the entire project (including a new tv and furniture) was paid off in full in less than 2 years, if I remember right… Again, if you care, it’s documented in the archives here on the site…

So now I find myself on the cusp of borrowing $70k but it’ll take 15 years to pay off?

Could that be right?

Sure, I could’ve done a ten year term but wanted a lower payment for added flexibility.

Even still, where did our ability to pay down debts so rapidly disappear to?

I don’t feel that, for even one second, we could pay down that kind of debt in, say, 5 years even…

Yet, for years, I made it a habit of paying down my debts to the tune of $20k per year…

The cost of daycare is the only thing I can think of that’s “new” since the days when I was able to do that so of thing…

Not with ease, mind you, but it was do-able.

Oh wait, we’re currently paying around $24k per year for daycare…

Now I get it…

We’re gonna be fine.

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Toronto-DominionSo, now having done more than minimal research, it seems I’ve now found my lender of choice.

I scoped out the rates of the big banks, the little banks, and a bunch of the local credit unions and the one thing they all had in common… was the interest rate.

Very little variance.

You might have read on all kinds of websites to “shop around” and submit applications all over the place to get the best rate. I dunno — based on my experience — that’s more a waste of time than anything else.

In the end, I selected and submitted a loan application to TD Bank.

Here was my reasoning:

  • Competitive Rate – They weren’t the highest and they weren’t the lowest but they were in the sweet spot of my target rate. The rate is 5.04% on a fixed 15-year term.
  • Proximity to Home – When we refinanced our original mortgage, my wife and I end up having to take multiple days off, visit the mortgage broker, hit a law office, and, well, it was just a bigger hassle than it should have been. The TD branch for this loan is literally right around the corner. And they’re open on weekends too.
  • Clear and Concise Website – While some of the credit union websites were far more upfront about what the monthly payments would/could be, no site was as well organized and informative as TD’s. They didn’t try to lump it all together with HELOC using terms that apply to one but not the other throughout — plain old home equity loans have their own section and aren’t littered with fluff that applies to other types of loans.
  • They’re Canadian – What can I say? It shouldn’t matter but it does… There is some expat pride going on as I see the banks in Canada flood the US market using abbreviations as names to veil their maple leaf identity. Now if they could just figure out how to connect my Canadian checking account to one opened here in the US — I’d ditch Bank of America in a heartbeat…

So I did the application online since it’s been my experience that when you do it in person, the person at the bank essentially just fills the website out for you.

No thanks, I’m pretty sure I can type out my info faster.

So it took maybe 10 minutes, a bunch of the simple questions you’d expect, the stuff they need to pull your credit, and minimal debt declarations.

Apparently, two days from now, they’ll have a “decision”.

Seems too easy.

I’m skeptical but that’s just my nature. We’ll have pay stubs, W-2’s, and tax returns handy just in case.

And I’m crossing my fingers that an interior appraisal won’t be necessary — not that I have anything to hide since our last HUGE remodel. At this point, it’s just a hassle (and day off from work) that I’d rather not have to endure.

During the application process, the site claimed that I could borrow $115k. Yowzers.

I asked for $70k and a 15 year term. Monthly payment will be $550.

Yep — right where I thought it would be.

I’ll keep you posted!

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Regarding the garage thing… Last year around this time we were ready to pull the trigger and hire a contractor to get the whole garage thing taken care of.

Clearly, it never materialized.

At the time, I was ready to sign off on a $60k project.

Like, hand me the pen and I’ll sign right now…

Actually, I brought my own pen. Just show me where to sign…

We went to one of those barnyard places — you know, the places that sell sheds and things — but an upscale one. Oh, why not name names. It was Kloter Farms — they’re pretty big around this area.

Anyway, they build furniture, sheds, gazebos, pool house, horse stables, and, yes, two-story 3-car garages.

So my wife and I took a day off from work and drove out there with the intention of signing off on a purchase pending a loan application through their own financing, pulling a building permit, and just getting the whole process underway.

We got there on a very un-busy fall morning and hung out in the “model” that we liked best until a salesperson finally made their move and sunk their hooks in.

Up to the “office” we went — time to hammer out a deal…

Or so I thought.

The dude asked us simple questions like “How big?” and “How many bays?”.

“Seriously, man? The one we were standing in when you saw us and we said that it was perfect… Just like that one. That’s what we want. Duh?”

Obviously, I was too gracious to vocalize the snark outloud…

So he proceeded to circle pricing figures and turn down corners of pages in their catalog so we could “reference them later”.

“Um, yeah, I get the catalog in the mail and I visited your website before coming. I know the price and I pretty much know what I want too.”

So, here this sales dude had us AT HIS DESK where we were 100% ready to make a deal and he just circled a few charts in their catalog, stapled his card to the front cover, and sent us on our way.

Befuddled, we did just that. Went on our way.

Seriously.

Or, should I say “NOT” seriously since he clearly did not take us seriously.

Needless to say, they’re no longer our first choice for constructing this thing…

We’ll still buy a kitchen table from them though…

Anyway, it took me back to when I first ventured into that BMW dealership back in 1999…

After casually pondering the idea for about a week, I decided that I wanted to buy a BMW Z3 just like the one in the James Bond movie that, to this day, I’ve still never actually seen.

One night, after work, I drove my Jetta to the dealership, got out, and started milling about the lot.

Much to my surprise, none of the scummy looking salesman in the pecking order took notice. Not one.

Sure, I was a 23 year old VW driving kid trying to sport a wannabe beard in jeans, a tie dye t-shirt, and sneakers so I might not have been their typical customer but, still, I was in the showroom on a Tuesday night — the only customer there — opening doors and playing with radio knobs.

Unbeknownst to them, the “so slimy that I’d even call them buttery” salesmen were totally missing some low hanging fruit.

Someone was going to sell a car that night. A blue one.

To the kid in the t-shirt.

For real.

So eventually, after maybe 30 minutes of opening and closing various compartments in an escalating fashion (in hindsight, I should have “tested” a few horns at the onset) inside the showroom to draw attention to myself, a younger salesman that hadn’t been out in the lot chain-smoking earlier finally approached me.

I say “younger” as in he was clearly not a longtime grizzled chain-smoker, err, car salesman. He was probably in his mid 30’s — so, still a good dozen years older than me — but, besides the gel in his curly hair which was still kind of in style at the time, there was nothing “buttery” about him.

“Are you looking for anything in particular?”

“Yep, I’d like to buy the Blue Z3 convertible right out front.”

Not even 30 minutes later, Tyler Westcott (who I really doubt stuck with the auto salesman gig so I’ll throw his name out there) had sold a BMW to me.

I’m pretty sure that none of the other guys in there sold a car that night.

Oh, how I’d have loved to have been a fly on the wall after I left the dealership.

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I talked before about how I’m more apt to paying down debt than I am building savings.

I dunno — for some reason, the “money game” is more fun that way for me.

Playing with someone else’s money — and then paying them back — just feels safer than risking my own.

Reality tells me that’s a wacked out way of thinking but it’s always worked for me. Can’t argue with that.

So, going back to this garage dream that I’ve had brewing for the past few years… I’ve decided the time is now.

I’d always been afraid of the “second mortgage” — why would you ever leverage your HOUSE? — but I’ve come to realize that, well, it’s probably one of the smartest things I could do for me and my family right now.

We need this garage. We need the space. We need the re-configured yard.

My kids are getting older. I’m getting older. And, really, this is the time when, if at all possible, I should have the things I want — you know, when they’ll be appreciated the most and for the longest.

I tried “saving” up. It’s not working. Something always comes up. You know how it is…

That new car put a real damper on the savings trend line…

And, really, it would be foolish to save for 15 years only to be priced out (as things naturally increase in price) rather than get something now and pay it down over the next 15 years…

Buying my house when I did was an excellent financial move. It would be irresponsible NOT to build a garage now — regardless of the added risk.

Right now, I believe we can afford an “additional” $600 per month payment. Combined with my current mortgage, that would bring my monthly mortgage payments to $1100 per month, which, in this neck of the woods is unheard off unless you bought your house in the mid 1980’s and are 27+ years into the mortgage.

I’ve got like 27 years to go…

Really, my current sub-$500 mortgage payment is off the charts.

Like, under the charts.

Underground, even.

So, my goal is to secure at least $60k in the form of a fixed rate home equity loan. If I can secure more, great, but my primary objective is to secure a minimum of $60k at somewhere between 4 and 6 percent.

Minimal research indicates that these terms will land me a roughly $600 payment over 10 years. I’ll shoot to secure a 15 year loan for added flexibility at the onset.

My preference of a regular loan over a line of credit is simply because I’m more comfortable with a fixed rate -and- having all of the money at once is just easier to manage. There aren’t withdrawal windows, or limits, potential overdraws, or variable sized payments to be made.

Here’s the money, do what you want with it, pay us back this much each month.

Simple.

As for the dollar figure, I think it will take $60k to build the exterior of the garage that I want and, frankly, we need. It may take a bit more to “finish” it — as in make the upper level look, well, like a real finished room — but at least the expensive part will be taken care of.

My minimal research also indicated that, using my very conservative guesstimations, $60k is about what I expect a lender will offer to me based on my current loan-to-value ratio.

Time is of the essence here too, I think.

I’ve said before that I feel that I’ve plateaued when it comes to my earning power. Sure, I might be a little young to make that claim but I still feel it’s true.

It would be incredibly stupid of me not to take advantage of the “numbers” supporting my position at this very moment.

Buy low, sell high. I feel my stock is high right now…

Also worth mentioning, our oldest son will be joining the public school ranks next fall as a kindergartner. Financially, this is HUGE as it will cut our childcare expenses by at least 40%.

Forty percent is like $750 extra per month in my pocket.

Yep, that’ll make a $600 second mortgage payment that much easier.

Two years later, both kids will be in school. Barring a third smurfling (which I’m actually hoping for — we *can* afford it!), paying this loan doesn’t carry much risk as far as I’m concerned after the first few months (which, technically, I’ll be able to use the funds from the loan to pay).

Seems like a pretty solid plan, no?

Time to start getting all of my documents together and testing the waters…

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For some reason, perhaps my hoarding tendencies, I still feel like the longer that I own stock in a company (as the value increases) that, through the price increases, I continually own more and more of that company.

That’s wrong.

There is zero connection between the two.

If I bought one share of Tesla at $60 and now it’s worth $180, sure, I made $120 (on paper) but I still only own one share.

I need to start letting go. Buy low and sell high.

Both of my Elon Musk stocks have earned me over 100% as of right now. Even the dud that Facebook appeared to be at first is up over 50%.

I should SELL!

I’m not so greedy as to *expect* returns that high — I should take the money and run, errr, re-invest in something I think is undervalued…

Here goes nothin!

Can You Dig It?

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