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How low can you go?
Topic Started: Jan 26 2013, 10:43 AM (771 Views)
Axtremus
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HOLY CARP!!!
jon-nyc
Jan 28 2013, 12:04 PM
I just worked up a quick spreadsheet showing two scenarios:

(1) Year 3 of a 30 year mortgage. Interest rate drops from 5% to 3%. In that year (3) you'd save 5k of interest if the beginning balance was 260k.

(2) Year 13 of a 15 year mortgage. Interest rate drops from 5% to 3%. In that year (13) you'd save 5k of interest if the beginning balance was 975k.

If you'd like I'll email you the spreadsheet.
Thank you very much for doing that. I meant to follow up on this yesterday but got sidetracked by something else with a tight deadline.

I tried to duplicate your results and I think I got close to the first case (the $260k/30 yrs. example), but still quite a bit off for the second case (the $975k/15 yrs. example) -- for this second example, you said "year (13)" is where the $5k savings would occur should the rate changes, I got somewhere around the "month 130-ish" instead. :shrug:

If you don't mine and still have the spreadsheet, please send the spreadsheet to Axtremus _AT_ Gmail. Thanks in advance.
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jon-nyc
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Cheers
Just sent
In my defense, I was left unsupervised.
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big al
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Bull-Carp
While Ax's underlying assumption doesn't hold in the instance of an adjustment to an existing mortgage, it does set a lower bound on the size of the mortgage (barring the loan being some sort of heinous negative amortization instrument) as will no doubt be evident by a little manipulation of a spreadsheet or a mortgage calculator. Thus, the mortage may be a little or a lot bigger than the results of the quick calculation and the value of the underlying property may be a small or large multiple of the amount of the mortgage but it's not chicken feed unless you're Tyson or Perdue. :leaving:

Big Al
Location: Western PA

"jesu, der simcha fun der man's farlangen."
-bachophile
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jon-nyc
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Cheers
Yeah, we can reasonably conclude ITs mortgage is between 260 and 975k.
In my defense, I was left unsupervised.
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Mikhailoh
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If you want trouble, find yourself a redhead
That's getting pretty personal.
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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jon-nyc
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Cheers
You should hear what we say about your mortgage.
In my defense, I was left unsupervised.
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Mikhailoh
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If you want trouble, find yourself a redhead
You mean the loan formerly known as my mortgage? It is now refered to as ɷ
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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big al
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Bull-Carp
Speaking of which, how's your building project coming, Mik? I don't imagine there's anything going on outside, but do you have any interior work in progress?

Big Al
Location: Western PA

"jesu, der simcha fun der man's farlangen."
-bachophile
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ivorythumper
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I am so adjective that I verb nouns!
jon-nyc
Jan 29 2013, 12:07 PM
Yeah, we can reasonably conclude ITs mortgage is between 260 and 975k.
:lol2: you're within 100% +/-.
The dogma lives loudly within me.
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Mikhailoh
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If you want trouble, find yourself a redhead
big al
Jan 29 2013, 01:31 PM
Speaking of which, how's your building project coming, Mik? I don't imagine there's anything going on outside, but do you have any interior work in progress?

Big Al
Actually this week has seem a great leap outside after I had a little come to Jesus with my contractor yesterday. He took three weeks vacation around the holidays, did a couple days the week after and NOTHING last week because it was so cold. Then he did not show up yesterday when it was warm again.

I understand why he won't nail up cedar trim in very cold weather, but there is a lot more to be done inside and he has heating units. I believe I have reshaped his thinking. I hope so, because I am not one to say things twice in business. At this point I could finish it if I had to.

I'll take some pics when it's nice again. We are about ready to install the stone siding.
Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball
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Axtremus
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HOLY CARP!!!
Axtremus
Jan 29 2013, 08:14 AM
jon-nyc
Jan 28 2013, 12:04 PM
I just worked up a quick spreadsheet showing two scenarios:

(1) Year 3 of a 30 year mortgage. Interest rate drops from 5% to 3%. In that year (3) you'd save 5k of interest if the beginning balance was 260k.

(2) Year 13 of a 15 year mortgage. Interest rate drops from 5% to 3%. In that year (13) you'd save 5k of interest if the beginning balance was 975k.

If you'd like I'll email you the spreadsheet.
Thank you very much for doing that. I meant to follow up on this yesterday but got sidetracked by something else with a tight deadline.

I tried to duplicate your results and I think I got close to the first case (the $260k/30 yrs. example), but still quite a bit off for the second case (the $975k/15 yrs. example) -- for this second example, you said "year (13)" is where the $5k savings would occur should the rate changes, I got somewhere around the "month 130-ish" instead. :shrug:
Follow-up ... I fixed my spreadsheet and now concur with jon-nyc's claims that for the two examples cited above,

(1) Year 3 of a 30 year mortgage. Interest rate drops from 5% to 3%. In that year (3) you'd save 5k of interest if the beginning balance was 260k.

(2) Year 13 of a 15 year mortgage. Interest rate drops from 5% to 3%. In that year (13) you'd save 5k of interest if the beginning balance was 975k.

Now I also understand why jon-nyc did not agree with my earlier statement that says a 2%-point difference in interest rate that leads to a $5k savings suggests a $250k mortgage. Here's the difference:

By "size of mortgage" or "how big a mortgage is," I was referring to the principal balance at the time the interest rate change takes effect, while jon-nyc was referring to the mortgage's initial principal amount. Once we standardize on "mortgage balance at the time the interest rate change takes effect," the insight that says "2%-point interest = $5k means principal balance = $250k" hold.

If you build out the entire amortization schedules for the two examples jon-nyc gave, you'd see that for the $260k/30yrs@5% example, years 3's principal balance is around $250, ditto the 975k/15yrs@5% example in year 13. (jon-nyc or anyone else who wants to verify this claim, the Excel function CUMPRINC(rate,nper,pv,n1,n2,0) might come in handy.)

It's true that I have no idea what IT's mortgage's initial principal amount was, but given what IT has posted, I do know that IT's mortgage's principal balance, around the time he got that 2%-point interest rate reduction, was around $250k.

(Why am I playing with the spreadsheets and resurrecting this thread now? Because I have nothing better to do while the piano tech. is tuning my piano. The piano tech is not done yet, so now I'm going to read a nerdy math/comp.sci. paper that probably only Klaus or Ballyhoo might find interesting.)
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Klaus
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Axtremus
Feb 1 2013, 01:56 PM
now I'm going to read a nerdy math/comp.sci. paper that probably only Klaus or Ballyhoo might find interesting.
Which one is it?

Let me know if you need recommendations for particularly nerdy papers in that domain :lol2:
Trifonov Fleisher Klaus Sokolov Zimmerman
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Axtremus
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HOLY CARP!!!
Klaus
Feb 1 2013, 02:04 PM
Axtremus
Feb 1 2013, 01:56 PM
now I'm going to read a nerdy math/comp.sci. paper that probably only Klaus or Ballyhoo might find interesting.
Which one is it?
The one that I'm supposed to peer-review.
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Mark
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HOLY CARP!!!
WGAFF?

It's all play money anyway.
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When I see an adult on a bicycle, I do not despair for the future of the human race. H.G. Wells
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Klaus
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Axtremus
Feb 1 2013, 02:06 PM
Klaus
Feb 1 2013, 02:04 PM
Axtremus
Feb 1 2013, 01:56 PM
now I'm going to read a nerdy math/comp.sci. paper that probably only Klaus or Ballyhoo might find interesting.
Which one is it?
The one that I'm supposed to peer-review.
Would you mind telling me the journal/conference/venue?
Trifonov Fleisher Klaus Sokolov Zimmerman
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Axtremus
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IEEE Transactions on Computers.

Let me ask you a question since you're following this thread ...

If I say the word "diagnostics" as it pertains to computer systems ... would you assume that

(1) some external tool/agent (external to the computer system to be diagnosed) is involved, or

(2) no external tool/agent is involved (so it's left for the computer system to diagnose itself), or

(3) make neither assumption (i.e., expect to be told at some point whether the diagnostic is done by external tool/agent or just the system diagnosing itself) ?
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Klaus
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(3)

How come you review papers for TC? I don't remember you saying that you do research.
Trifonov Fleisher Klaus Sokolov Zimmerman
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jon-nyc
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Cheers
He often hangs around campuses holding a 'Will Peer Review Papers For Food' sign. Occasionally he gets a bite.
In my defense, I was left unsupervised.
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musicasacra
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HOLY CARP!!!
Axtremus
Feb 1 2013, 01:56 PM
It's true that I have no idea what IT's mortgage's initial principal amount was, but given what IT has posted, I do know that IT's mortgage's principal balance, around the time he got that 2%-point interest rate reduction, was around $250k.
Nope. I haven't been following this discussion, but your formulas are off or you are missing some inputs.
But I'm not going to help you out there either.
Edited by musicasacra, Feb 2 2013, 09:52 AM.
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musicasacra
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jon-nyc
Feb 1 2013, 03:52 PM
He often hangs around campuses holding a 'Will Peer Review Papers For Food' sign. Occasionally he gets a bite.
^_^
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Axtremus
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HOLY CARP!!!
Klaus
Feb 1 2013, 03:16 PM
(3)
OK, thanks!
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How come you review papers for TC?
Probably because they asked nicely.
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I don't remember you saying that you do research.
Your memory is fine; I never say I do TC-type research on TNCR.
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dolmansaxlil
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When I saw how many responses this thread had gotten, I assumed some interesting conversation had sprung up... Wow, was I wrong. ;)
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John D'Oh
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MAMIL
dolmansaxlil
Feb 2 2013, 06:19 AM
When I saw how many responses this thread had gotten, I assumed some interesting conversation had sprung up
The triumph of hope over experience.
What do you mean "we", have you got a mouse in your pocket?
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Dewey
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:wave:
"By nature, i prefer brevity." - John Calvin, Institutes of the Christian Religion, p. 685.

"Never waste your time trying to explain yourself to people who are committed to misunderstanding you." - Anonymous

"Oh sure, every once in a while a turd floated by, but other than that it was just fine." - Joe A., 2011

I'll answer your other comments later, but my primary priority for the rest of the evening is to get drunk." - Klaus, 12/31/14
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Horace
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HOLY CARP!!!
C'mon. A detailed discussion of the amount of another man's mortgage is perfectly appropriate in a thread titled "how low can you go?".
As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good?
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