Relationship mortgage discounts for moving a million assets

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nepats
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Re: Relationship mortgage discounts for moving a million assets

Post by nepats » Sat May 11, 2019 7:52 am

softwaregeek wrote:
Fri May 10, 2019 7:40 pm
Quick update: I did another round of negotiations, cause I'm just like that.

The final tally:

1. Citibank - Move $1M, 3.375%, no points, no fees, $3k closing costs.

2. Wells Fargo - Move $1M to WellsTrade, 3.375, no points, no fees, no closing costs. Alternatively, 3.25%,and I pay $4k closing costs

3. BofA - THE WINNER. 3.25%. $5k closing costs Less $600 for my current BofA account Tier. In 9 months, they will give me a special account move bonus of $2500 for moving an additional $1M to Merrill Edge, bringing my balance there to $1.6M
Thanks for sharing. Which term are these rates on? I am getting a 3.5 on 10/1 ARM excluding any relationship discounts. Potentially, I can get down to 3.0 with $1M move

HEDGEFUNDIE
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Re: Relationship mortgage discounts for moving a million assets

Post by HEDGEFUNDIE » Sat May 11, 2019 8:29 am

nepats wrote:
Sat May 11, 2019 7:52 am
softwaregeek wrote:
Fri May 10, 2019 7:40 pm
Quick update: I did another round of negotiations, cause I'm just like that.

The final tally:

1. Citibank - Move $1M, 3.375%, no points, no fees, $3k closing costs.

2. Wells Fargo - Move $1M to WellsTrade, 3.375, no points, no fees, no closing costs. Alternatively, 3.25%,and I pay $4k closing costs

3. BofA - THE WINNER. 3.25%. $5k closing costs Less $600 for my current BofA account Tier. In 9 months, they will give me a special account move bonus of $2500 for moving an additional $1M to Merrill Edge, bringing my balance there to $1.6M
Thanks for sharing. Which term are these rates on? I am getting a 3.5 on 10/1 ARM excluding any relationship discounts. Potentially, I can get down to 3.0 with $1M move
OP was offered 2.75% for 10/1 ARM.

FoolStreet
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Re: Relationship mortgage discounts for moving a million assets

Post by FoolStreet » Sat May 11, 2019 10:11 am

softwaregeek wrote:
Fri May 10, 2019 8:16 pm
A few final thoughts:

1. My back of the envelope calculations show the net present value of the relationship discount and cash rebates at about $38k. Which is a mind boggling benefit for parking ETF's at Merrill Edge.

2. On a monthly basis, I'm saving about $425 pretax and $300 post tax.

3. I still do prefer doing business with Schwab, but for people who need to refi a mortgage, they aren't even in the arena. . And I'll see what my new account tier gets me at Merill Edge. Apparently, $1M in assets at gets me some kind of upgrade, so maybe they will pull closer to even on the service front.

4. The conforming market is pretty staid. You might be able to get a rebate here or there or maybe even an eighth. But the jumbo market is the wild west and if you have assets, you can haggle like a bazaar.

5. 3.25% is mind boggling to me.

6. (*Edit*) The broker at Citi said he had been doing mortgages for 27 years and done 'only a few' of these relationship mortgages.
2. How much is that savings from resetting a new loan term vs principle paid?

I am at 3.5 30yr jumbo. You are talking 30year? What’s the best way to find these brokers?

Would you have gotten the 2500 as an account move bonus anyway, without the mortgage?

Thanks for the updates. Sounds like you are doing great.

nepats
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Re: Relationship mortgage discounts for moving a million assets

Post by nepats » Sat May 11, 2019 10:12 am

HEDGEFUNDIE wrote:
Sat May 11, 2019 8:29 am
nepats wrote:
Sat May 11, 2019 7:52 am
softwaregeek wrote:
Fri May 10, 2019 7:40 pm
Quick update: I did another round of negotiations, cause I'm just like that.

The final tally:

1. Citibank - Move $1M, 3.375%, no points, no fees, $3k closing costs.

2. Wells Fargo - Move $1M to WellsTrade, 3.375, no points, no fees, no closing costs. Alternatively, 3.25%,and I pay $4k closing costs

3. BofA - THE WINNER. 3.25%. $5k closing costs Less $600 for my current BofA account Tier. In 9 months, they will give me a special account move bonus of $2500 for moving an additional $1M to Merrill Edge, bringing my balance there to $1.6M
Thanks for sharing. Which term are these rates on? I am getting a 3.5 on 10/1 ARM excluding any relationship discounts. Potentially, I can get down to 3.0 with $1M move
OP was offered 2.75% for 10/1 ARM.
Interesting. I wonder if the difference is because of the size of the loan/location or my lack of negotiating skills :)

Startled Cat
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Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Sat May 11, 2019 10:28 am

softwaregeek wrote:
Sat May 11, 2019 12:27 am
10/1 arm was priced 28bps above government 10 year bond rate.
I see 2.47% on the 10 year, so the 10/1 ARM was quoted around 2.75% with the relationship discount?

That's fantastic. Was this a quote from Wells?

My plan had been to look into this in a few months when I've held funds at Merrill Edge long enough to receive the $2000 in bonuses I'm going for, but I'm starting to wonder if I should walk away from the cash bonuses and look into mortgage refinancing instead. $2000 is small potatoes compared to the $50k NPV of a 0.5% relationship discount. Rates could move significantly in a few months and cost me a lot more than $2000.

nepats
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Re: Relationship mortgage discounts for moving a million assets

Post by nepats » Sat May 11, 2019 10:34 am

Startled Cat wrote:
Sat May 11, 2019 10:28 am
softwaregeek wrote:
Sat May 11, 2019 12:27 am
10/1 arm was priced 28bps above government 10 year bond rate.
I see 2.47% on the 10 year, so the 10/1 ARM was quoted around 2.75% with the relationship discount?

That's fantastic. Was this a quote from Wells?

My plan had been to look into this in a few months when I've held funds at Merrill Edge long enough to receive the $2000 in bonuses I'm going for, but I'm starting to wonder if I should walk away from the cash bonuses and look into mortgage refinancing instead. $2000 is small potatoes compared to the $50k NPV of a 0.5% relationship discount. Rates could move significantly in a few months and cost me a lot more than $2000.
I may have to ask then again if that's the case. So far I can get 3.0 from Wells with Discount on 10/1

Topic Author
softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Sat May 11, 2019 10:41 am

FoolStreet wrote:
Sat May 11, 2019 10:11 am
softwaregeek wrote:
Fri May 10, 2019 8:16 pm
A few final thoughts:

1. My back of the envelope calculations show the net present value of the relationship discount and cash rebates at about $38k. Which is a mind boggling benefit for parking ETF's at Merrill Edge.

2. On a monthly basis, I'm saving about $425 pretax and $300 post tax.

3. I still do prefer doing business with Schwab, but for people who need to refi a mortgage, they aren't even in the arena. . And I'll see what my new account tier gets me at Merill Edge. Apparently, $1M in assets at gets me some kind of upgrade, so maybe they will pull closer to even on the service front.

4. The conforming market is pretty staid. You might be able to get a rebate here or there or maybe even an eighth. But the jumbo market is the wild west and if you have assets, you can haggle like a bazaar.

5. 3.25% is mind boggling to me.

6. (*Edit*) The broker at Citi said he had been doing mortgages for 27 years and done 'only a few' of these relationship mortgages.
2. How much is that savings from resetting a new loan term vs principle paid?

I am at 3.5 30yr jumbo. You are talking 30year? What’s the best way to find these brokers?

Would you have gotten the 2500 as an account move bonus anyway, without the mortgage?

Thanks for the updates. Sounds like you are doing great.
Yes. 30 year. For Citi I just called on the phone. For Wells, I worked with broker before. Bofa was a referral.

2500 is available to everyone I think but not published. Not sure how often they give it out.

confused1
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Re: Relationship mortgage discounts for moving a million assets

Post by confused1 » Sat May 11, 2019 11:09 am

Going through the same currently with a refi Jumbo Loan for SFH in San Francisco.

Moving forward with a 7/1 ARM at 3.25% from Wells Fargo (closing costs covered by credit from WF) and moving $250k AUM.

Startled Cat
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Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Sat May 11, 2019 11:15 am

Interesting to note that 3.25% can be low enough for holding cash to have a better return than paying off the mortgage.

Assuming mortgage interest can be deducted, what matters is the tax-equivalent yield of a cash instrument. The SEC yield of the Vanguard CA Muni MM is 1.62%. It's slightly inflated due to seasonality, but not that much anymore (it was around 1.9% a week or two ago). For someone in the highest federal tax brackets, this beats the mortgage rate. In the 35% federal tax bracket, it's really close.

With the 10/1 ARM apparently quoted at approximately 2.75%, holding cash is easily better with these parameters. Even the treasury money market fund, which doesn't experience seasonality, has a higher TEY in the 35% / 10.3% brackets. And if you extend duration and go with something like a tax-exempt bond fund, you can actually get a decent arbitrage return (albeit not risk-free abitrage).

I've thought it would be amusing to borrow a large mortgage balance from Wells Fargo or BofA and then invest in the same bank's preferred stock as an arbitrage play (such as WFC-L yielding 5.68%, or BAC-L or 5.47%). Note that this is tounge-in-cheek and I wouldn't actually recommend doing this.

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softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Sat May 11, 2019 11:17 am

Lowest potential rate here would be .375 more for moving a million and .125 for paying closing costs yourself. That's how you get to 2.75 percent.

nepats
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Re: Relationship mortgage discounts for moving a million assets

Post by nepats » Sat May 11, 2019 1:35 pm

softwaregeek wrote:
Sat May 11, 2019 11:17 am
Lowest potential rate here would be .375 more for moving a million and .125 for paying closing costs yourself. That's how you get to 2.75 percent.
Yup. If I do all that then the rate is only* at 3.0 so I may have some wiggle room. Though my mortgage balance is not as big fortunately :)

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softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Sat May 11, 2019 3:26 pm

Update: I just had a WTF moment.

BofA broker called back out of the blue. She told me that If I sent her an email outlining the wells offer, she would get me 3.25 with closing costs credited at $4k instead of the normal $600 for BofA platinum Honors tier customers. And I get the 2.5k account credit from Merrill after a year for keeping balance over $1.6M. However, I might be able to move $500k out since I did my first relationship deal for $500k almost exactly a year ago. Not sure how it works but I will deal, I suppose.

I am considering trying to buy down another eighth. If I could go down to 3.125, I can't conceive of a 30 year fixed rate worth refinancing to. And I'm going to be in this house for a long time, since I bought the house for the schools and my youngest hasn't started kindergarten.

Startled Cat
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Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Sat May 11, 2019 4:30 pm

softwaregeek wrote:
Sat May 11, 2019 3:26 pm
I am considering trying to buy down another eighth. If I could go down to 3.125, I can't conceive of a 30 year fixed rate worth refinancing to. And I'm going to be in this house for a long time, since I bought the house for the schools and my youngest hasn't started kindergarten.
Why not consider a 10/1 ARM instead of buying down the 30 year fixed?

You get a significant interest rate reduction by opting for the adjustable rate. If you move or refinance within 10 years, you're clearly better off with the ARM. The breakeven period is probably at least 12 years when you balance the post-adjustment rate against the lower rate paid during the fixed rate period, and consider time value of money. And in the worst case where rates spike and there is never a favorable opportunity to refinance, it sounds like you can easily pay off what's left of the loan.

It sounds like you expect to stay put for awhile, which is a good argument for the 30 year fixed, but plans can change. The extremely favorable rate from the relationship discount also makes the 30 year look really good - who know if banks will still be offering deals like that when it comes time to refi an ARM? In general I like the risk/reward tradeoff of 10 year ARMs for people with substantial assets, but I don't think you can go wrong either way.

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softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Sat May 11, 2019 6:54 pm

nepats wrote:
Sat May 11, 2019 10:12 am

Interesting. I wonder if the difference is because of the size of the loan/location or my lack of negotiating skills :)
In the past, BofA offered an additional eighth off loans greater than a million. Don't know if this is the case now.

Topic Author
softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Sat May 11, 2019 7:25 pm

Startled Cat wrote:
Sat May 11, 2019 4:30 pm
softwaregeek wrote:
Sat May 11, 2019 3:26 pm
I am considering trying to buy down another eighth. If I could go down to 3.125, I can't conceive of a 30 year fixed rate worth refinancing to. And I'm going to be in this house for a long time, since I bought the house for the schools and my youngest hasn't started kindergarten.
Why not consider a 10/1 ARM instead of buying down the 30 year fixed?

You get a significant interest rate reduction by opting for the adjustable rate. If you move or refinance within 10 years, you're clearly better off with the ARM. The breakeven period is probably at least 12 years when you balance the post-adjustment rate against the lower rate paid during the fixed rate period, and consider time value of money. And in the worst case where rates spike and there is never a favorable opportunity to refinance, it sounds like you can easily pay off what's left of the loan.

It sounds like you expect to stay put for awhile, which is a good argument for the 30 year fixed, but plans can change. The extremely favorable rate from the relationship discount also makes the 30 year look really good - who know if banks will still be offering deals like that when it comes time to refi an ARM? In general I like the risk/reward tradeoff of 10 year ARMs for people with substantial assets, but I don't think you can go wrong either way.


Let me digress a little bit from the nuts and bolts of pricing into a worldview question.

It is standard wisdom that you will refinance every few years. That you will likely move houses before every ten. Where did this standard wisdom come from?

If you look at the history of interest rates https://www.valuepenguin.com/mortgages/ ... gage-rates you will notice that mortgage rates have been going down pretty much steadily since 1982.


A sustained period of rising rates, which we haven't seen in 40 years, changes all of that.

So, if you bought a house in the last forty years, you made money. You made money because you could always refinance in a few years at a lower rate, and lower interest rates drive demand and prices higher. It made it easier to always swap into a new home.

But I think it's better than even odds that this trend is over. You will note from the chart that the only three year increase in average rates since 1982 is the last three years.

What happens if the current trend continues? Well, people will move less or rent out old houses more. Because a below market mortgage is a valuable asset which can be calculated as a NPV of a stream of future cash flows.

Assume you buy a house for $2 million and have a mortgage at 4% for $1M. That's 40k in interest. Now let's assume that interest rates go to 6%. That house might go for 1.8 million, but your interest payment would be 800k*6%=48k, a savings of 8k per year in interest. You could swap houses, but you would have to sell at market price, buy at market price, and pay more in interest. You would pay $8k more in taxes, although that would decline over the length of the mortgage. Also, the current assumption is the price of houses will increase over the long term, which means that even with an interest only mortgage, you will do well. But in a long term rising interest rate environment, this may not be the case. Declining equity may very well mean that people are unable to get out of their existing mortgage by selling a home, as is the case now. Because if you had borrowed with a 10% down mortgage, and the price went down 20%, you couldn't get out without a short sale, because no bank would underwrite based on a negative equity house short of a full government guarantee.

Now, imagine a situation where 1. The US federal government likes to spend more money than it has. and 2.there are not ever increasing buyers for an ever increasing US government debt. What happens in this situation? Well, the laws and supply and demand tell us that more supply of debt and less demand will increase the interest rate.

One could point to Japan in this situation, but one could also point to Argentina. Not many people know that in the late 1800's, Argentina had a highest GDP per capita in the entire world. Higher even than the United States or Switzerland, or England at the very peak of it's Victorian empire. What went wrong? Well, I leave that as an exercise to you, the reader.


HEDGEFUNDIE
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Re: Relationship mortgage discounts for moving a million assets

Post by HEDGEFUNDIE » Sat May 11, 2019 9:08 pm

softwaregeek wrote:
Sat May 11, 2019 7:25 pm
Assume you buy a house for $2 million and have a mortgage at 4% for $1M. That's 40k in interest. Now let's assume that interest rates go to 6%. That house might go for 1.8 million, but your interest payment would be 800k*6%=48k, a savings of 8k per year in interest. You could swap houses, but you would have to sell at market price, buy at market price, and pay more in interest. You would pay $8k more in taxes, although that would decline over the length of the mortgage. Also, the current assumption is the price of houses will increase over the long term, which means that even with an interest only mortgage, you will do well. But in a long term rising interest rate environment, this may not be the case. Declining equity may very well mean that people are unable to get out of their existing mortgage by selling a home, as is the case now. Because if you had borrowed with a 10% down mortgage, and the price went down 20%, you couldn't get out without a short sale, because no bank would underwrite based on a negative equity house short of a full government guarantee.
Let’s leave housing values out of it. One less variable to worry about.

You’re borrowing $1M at 3.25% but also had a 10/1 ARM offer for 2.75%. If you had chosen the ARM, over ten years you would have saved $50k in interest.

By year ten, if interest rates went up to 6%, it would take six more years before you ended up worse off than the 30 yr fixed, because (1) you saved the $50k, (2) that $50k earned a return, and (3) 10 years of inflation means your higher payments are actually lower in real terms.

Now, as far as the likelihood of higher rates in the future, I would actually bet my retirement portfolio on rates staying low for the rest of our lifetimes. Academic research shows the largest factor driving interest rates in the long run is actually demographics. A smaller workforce and more retirees will lower productivity, drive up demand for bonds, and ultimately keep rates low:

https://www.frbsf.org/economic-research ... est-rates/

https://research.stlouisfed.org/publica ... -interest/

Startled Cat
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Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Sun May 12, 2019 11:07 am

softwaregeek wrote:
Sat May 11, 2019 7:25 pm
Let me digress a little bit from the nuts and bolts of pricing into a worldview question.
I largely agree and that's why I ended up with a 30 year mortgage myself. A 30 year fixed mortgage is a pretty amazing product. For years before buying a home, I was envious of homeowners' ability borrow money for up to 30 years at a low fixed rate.

I don't have strong convictions on the direction of future rates, but I tend to expect they will go up significantly during my lifetime precisely because people aren't prepared for it to happen (i.e. HEDGEFUNDIE's post). The US hasn't seen large-scale inflation for a long time, and there's a consensus that it's a solved problem. There is little concern about structural budget deficits, except in shamelessly political contexts. It sounds like fertile ground for history to repeat itself.

Despite all that, recently I've been wondering if I might end up completely right about the macroeconomics, and still pay much more interest than I should. There is one scenario where the 30 year mortgage is better: rates go up soon, stay up, and I stay in my current home for well over a decade. Lots of other hypothetical scenarios favor an ARM:
  • Rates don't actually increase appreciably in the next decade.
  • In year 7 a recession hits, rates drop temporarily, and I'm able to lock a similar fixed rate for another 10 years.
  • My partner and I decide to move to a different neigborhood or a different style of home, despite financial downsides to moving.
  • Our financial situation changes for the better and we decide to splurge on a more expensive home after living here 10 years.
  • Our financial situation changes for the worse and we move to a cheaper home to save money.
  • One of us gets a job outside the city with a painful commute, and we reluctantly move to the suburbs to be closer to work.
  • We decide to move to a different geographic area for particularly exciting job offer, or just to try something new.
  • We separate for some reason, and neither of us wants to keep the home because it's too large and expensive for one person.
  • One of us dies, and the survivor doesn't want to keep the home because it's too large and expensive for one person.
I'm not trying to persuade anyone, just sharing my own thinking. As I mentioned earlier, being able to get a really good rate on a 30 year mortgage with a relationship discount might sway me to get another 30 year fixed loan when I next refinance, because a great rate that lasts for 30 years is more valuable than a great rate that lasts for 10 years.

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softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Sun May 12, 2019 11:31 am

On the one hand, Japan has structural debt and an aging population to a degree far in excess of the United States. That is the traditional economic view. which your links refer to. Their interest rates have remained low despite crushing debt.

On the other hand," Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output" (Per Milton Friedman).

I'm a cycnic about our political class as a whole, regardless of party, and in choosing between austerity and inflation, I think they would crank up the printing press. Yes, we have a supposedly independent fed, but I doubt that would last in the face of a crisis. I mean, why does Maduro print money? Because they need to get through tomorrow and next monthis far away.

One thing I think people missed about the 2008 financial crisis is that the LIBOR rate suddenly spiked for several months by several points, whereas T-bills went down (TED Spread) . Given the average ARM is based on LIBOR and can adjust by 2 points a year and many of these people couldn't appraise out at 20% equity, they were pretty much hosed for a full year.

HEDGEFUNDIE
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Re: Relationship mortgage discounts for moving a million assets

Post by HEDGEFUNDIE » Sun May 12, 2019 11:49 am

softwaregeek wrote:
Sun May 12, 2019 11:31 am
On the one hand, Japan has structural debt and an aging population to a degree far in excess of the United States. That is the traditional economic view. which your links refer to. Their interest rates have remained low despite crushing debt.

On the other hand," Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output" (Per Milton Friedman).

I'm a cycnic about our political class as a whole, regardless of party, and in choosing between austerity and inflation, I think they would crank up the printing press. Yes, we have a supposedly independent fed, but I doubt that would last in the face of a crisis. I mean, why does Maduro print money? Because they need to get through tomorrow and next monthis far away.

One thing I think people missed about the 2008 financial crisis is that the LIBOR rate suddenly spiked for several months by several points, whereas T-bills went down (TED Spread) . Given the average ARM is based on LIBOR and can adjust by 2 points a year and many of these people couldn't appraise out at 20% equity, they were pretty much hosed for a full year.
There are differences in kind between Venezuelan debt and US debt. Venezuela can’t get away with printing money because no one has faith in their political or economic system. The US can, because (1) we still have the strongest legal system in the world and (2) everything is relative, no one else will come close to our scale or reputation anytime soon. You may not have any faith (and this attitude is something I’ve often seen among my coder friends), but billions of other people do; look around the world, and you’ll realize how good we still have it.

Printing money is not a problem if there is demand for it. Think about it, if the weighted average portfolio AA for all Americans is currently 80/20, and an aging population shifts that to 60/40, the Treasury still has the capacity to issue significantly more debt without needing to raise the price of that debt. This is why demographics are so important to future interest rates.

And btw, LIBOR is going away. My new ARM is based on the Monthly Treasury Average, which is the average of the previous 12 monthly values of the 1-Year Treasury.

nepats
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Re: Relationship mortgage discounts for moving a million assets

Post by nepats » Sun May 12, 2019 3:08 pm

softwaregeek wrote:
Sat May 11, 2019 6:54 pm
nepats wrote:
Sat May 11, 2019 10:12 am

Interesting. I wonder if the difference is because of the size of the loan/location or my lack of negotiating skills :)
In the past, BofA offered an additional eighth off loans greater than a million. Don't know if this is the case now.
That would make sense. I am going to reach out to my rep at WF this week to see if I can get further savings. Either way, I will be happy with a rate close to 3.

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8foot7
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Re: Relationship mortgage discounts for moving a million assets

Post by 8foot7 » Sun May 12, 2019 4:24 pm

These rates are so low that I fear you may be letting perfect be the enemy of good enough. The ARM is risky, the 30 year fixed is so low as to be nearly a no-brainer. It would be for me.

saving4good
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Re: Relationship mortgage discounts for moving a million assets

Post by saving4good » Sun May 12, 2019 8:29 pm

softwaregeek wrote:
Fri May 10, 2019 8:20 pm

I had a relatively small conforming loan until recently. Your best bet is getting a personal referral to a super aggressive broker. I did multiple rounds of refi's on my prior house, starting at 5% and going down to 3.375%. Once you have a repeat relationship, you will be able to do better on a consistent basis. The trick is finding one - it's a lot like finding a car mechanic. Most of them suck and a few are gifted. My broker was challenging to deal with, but truly gifted. I did four or five refi's including the last loan after she moved to BofA.

Alternatively, I have used a place called Provident Funding. Their rates were quite good, although they were absolutely miserable to deal with. My broker explained to me that the way they keep their rates low is by using minimum wage employees. They are offering 3.875% now. A point on a $400k loan is worth $4k pretax right now, so the payback period would be quite good.

Thank you for the tips, I will look into finding a good broker in the future. Like you said, it's tricky to find one, so I will just stick with 4.125% no fees for now.

Looked up PF's website and Yelp and their reviews scared me away. :shock:
I'm truly happy for you that you're getting such a great rate though. :sharebeer

rsk
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Re: Relationship mortgage discounts for moving a million assets

Post by rsk » Mon May 13, 2019 10:51 am

Thanks to this thread I am also refinancing my jumbo loan with B of A at a pretty good rate. However, just for anyone else not in CA they cap the maximum rate discount for transfers at $500k. They are only doing the $1m transfer discounts in CA and FL for now, according to my banker at least.

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softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Mon May 13, 2019 11:55 am

rsk wrote:
Mon May 13, 2019 10:51 am
Thanks to this thread I am also refinancing my jumbo loan with B of A at a pretty good rate. However, just for anyone else not in CA they cap the maximum rate discount for transfers at $500k. They are only doing the $1m transfer discounts in CA and FL for now, according to my banker at least.
Try citi and Wells.

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softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Mon May 13, 2019 11:57 am

saving4good wrote:
Sun May 12, 2019 8:29 pm
softwaregeek wrote:
Fri May 10, 2019 8:20 pm

I had a relatively small conforming loan until recently. Your best bet is getting a personal referral to a super aggressive broker. I did multiple rounds of refi's on my prior house, starting at 5% and going down to 3.375%. Once you have a repeat relationship, you will be able to do better on a consistent basis. The trick is finding one - it's a lot like finding a car mechanic. Most of them suck and a few are gifted. My broker was challenging to deal with, but truly gifted. I did four or five refi's including the last loan after she moved to BofA.

Alternatively, I have used a place called Provident Funding. Their rates were quite good, although they were absolutely miserable to deal with. My broker explained to me that the way they keep their rates low is by using minimum wage employees. They are offering 3.875% now. A point on a $400k loan is worth $4k pretax right now, so the payback period would be quite good.

Thank you for the tips, I will look into finding a good broker in the future. Like you said, it's tricky to find one, so I will just stick with 4.125% no fees for now.

Looked up PF's website and Yelp and their reviews scared me away. :shock:
I'm truly happy for you that you're getting such a great rate though. :sharebeer
No question, horrific. To deal with. Rate was great, though.

spacecadet610
Posts: 46
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Re: Relationship mortgage discounts for moving a million assets

Post by spacecadet610 » Mon May 13, 2019 12:08 pm

what rate are you getting before relationship discount?
rsk wrote:
Mon May 13, 2019 10:51 am
Thanks to this thread I am also refinancing my jumbo loan with B of A at a pretty good rate. However, just for anyone else not in CA they cap the maximum rate discount for transfers at $500k. They are only doing the $1m transfer discounts in CA and FL for now, according to my banker at least.

spacecadet610
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Re: Relationship mortgage discounts for moving a million assets

Post by spacecadet610 » Mon May 13, 2019 12:08 pm

what rate are you getting before relationship discount?
rsk wrote:
Mon May 13, 2019 10:51 am
Thanks to this thread I am also refinancing my jumbo loan with B of A at a pretty good rate. However, just for anyone else not in CA they cap the maximum rate discount for transfers at $500k. They are only doing the $1m transfer discounts in CA and FL for now, according to my banker at least.

rsk
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Re: Relationship mortgage discounts for moving a million assets

Post by rsk » Mon May 13, 2019 12:37 pm

Before the relationship discount I couldn't get anyone to beat 3.75% on a 30 year fixed $1.1m loan. Wells offered 3.5% with $1m in new assets which I took to Citi, First Republic, and B of A. Citi and FR couldn't compete. B of A matched with $500k in new assets and a $1200 closing credit. Pretty sure I could have gotten more off on the closing but oh well.

EDIT: yields on the 10 year are down over .5% today. Now I'm wondering if I should have waited to lock in until tomorrow!

gougou
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Location: San Francisco Bay Area

Re: Relationship mortgage discounts for moving a million assets

Post by gougou » Mon May 13, 2019 1:31 pm

To be honest I am thinking about becoming a landlord in the bay area because of these crazy discounts on mortgages. I could buy a house every one or two years and borrow $1M+ at 3% to 3.5%.
HEDGEFUNDIE wrote:
Fri May 10, 2019 11:15 pm
The yield on the 30 year Treasury is 2.87%
So you are only 10% more risky than the Federal government :mrgreen:
A 30-year mortgage has a duration of 10 to 15 years so it's more appropriate to compare the rate to the 10 to 15 year treasury. The real deals are the 5/7/10 year ARMs where you can get lower than the Treasury yield with 0.5% discount.

Topic Author
softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Mon May 13, 2019 2:05 pm

rsk wrote:
Mon May 13, 2019 12:37 pm
Before the relationship discount I couldn't get anyone to beat 3.75% on a 30 year fixed $1.1m loan. Wells offered 3.5% with $1m in new assets which I took to Citi, First Republic, and B of A. Citi and FR couldn't compete. B of A matched with $500k in new assets and a $1200 closing credit. Pretty sure I could have gotten more off on the closing but oh well.

EDIT: yields on the 10 year are down over .5% today. Now I'm wondering if I should have waited to lock in until tomorrow!
Take it to wells. You aren't locked in there.

Edit: Don't forget to check for unpublished offers for Merrill Edge moving assets. You will have to keep the money there for a while, but it is worthwhile.

nepats
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Re: Relationship mortgage discounts for moving a million assets

Post by nepats » Mon May 13, 2019 4:16 pm

8foot7 wrote:
Sun May 12, 2019 4:24 pm
These rates are so low that I fear you may be letting perfect be the enemy of good enough. The ARM is risky, the 30 year fixed is so low as to be nearly a no-brainer. It would be for me.
My timeline to pay off the mortgage is 10 years, so it would make sense to get the lowest rate possible.

Topic Author
softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Mon May 13, 2019 5:57 pm

At 2 percent after tax, why pay off early? I ask honestly, not flippantly.

nepats
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Re: Relationship mortgage discounts for moving a million assets

Post by nepats » Mon May 13, 2019 6:33 pm

softwaregeek wrote:
Mon May 13, 2019 5:57 pm
At 2 percent after tax, why pay off early? I ask honestly, not flippantly.
Possible early retirement and desire to not carry a mortgage then. If the rates are still this low or even lower, I may reconsider with another refi.

saving4good
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Re: Relationship mortgage discounts for moving a million assets

Post by saving4good » Tue May 14, 2019 1:34 am

HEDGEFUNDIE wrote:
Wed May 08, 2019 9:51 pm
First Republic needs to be on your list. I just refinanced with them at 2.65%.

Yes they use Pershing, but Pershing actually has some positives. For example you get access to DFA funds, no advisory fee required.
How long do you have to keep the funds at First Republic for? I assume you'd have to keep it there for the life of the loan, but how would they enforce this? Charge a fee to your checking account?

pacodelostigres
Posts: 146
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Re: Relationship mortgage discounts for moving a million assets

Post by pacodelostigres » Tue May 14, 2019 12:38 pm

HEDGEFUNDIE wrote:
Fri May 10, 2019 11:55 am
pacodelostigres wrote:
Fri May 10, 2019 11:49 am
If you have several million dollars, why do you need/want a mortgage? Sounds like an avoidable headache.
If I can borrow $1M at (in my case) 2.2% (including tax benefits), why wouldn’t I do that?

Even conservative estimates of nominal market returns are at least 5%.
If you had a paid off house, would you mortgage it for a million dollars to invest? If so, then this makes sense. Personally, my investment strategy is not that aggressive. My house has been paid off for many years and I've never been tempted to mortgage it just to have even more index funds.

Liquidity is good, but so is the flexibility of being unlevered when other life circumstances change. Having no mortgage allowed me to quit a horrible job with no plan. That kind of freedom is worth more than risk/interest arbitrage (to me), and is equally applicable to other scenarios like unexpected job loss. If the market tanks at the same time as a job loss or medical emergency, I'd rather have no debt than a slightly better balance sheet, especially if both balance sheets are excellent.

HEDGEFUNDIE
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Re: Relationship mortgage discounts for moving a million assets

Post by HEDGEFUNDIE » Tue May 14, 2019 1:36 pm

saving4good wrote:
Tue May 14, 2019 1:34 am
HEDGEFUNDIE wrote:
Wed May 08, 2019 9:51 pm
First Republic needs to be on your list. I just refinanced with them at 2.65%.

Yes they use Pershing, but Pershing actually has some positives. For example you get access to DFA funds, no advisory fee required.
How long do you have to keep the funds at First Republic for? I assume you'd have to keep it there for the life of the loan, but how would they enforce this? Charge a fee to your checking account?
There is no enforcement.
pacodelostigres wrote:
Tue May 14, 2019 12:38 pm
If you had a paid off house, would you mortgage it for a million dollars to invest? If so, then this makes sense. Personally, my investment strategy is not that aggressive. My house has been paid off for many years and I've never been tempted to mortgage it just to have even more index funds.

Liquidity is good, but so is the flexibility of being unlevered when other life circumstances change. Having no mortgage allowed me to quit a horrible job with no plan. That kind of freedom is worth more than risk/interest arbitrage (to me), and is equally applicable to other scenarios like unexpected job loss. If the market tanks at the same time as a job loss or medical emergency, I'd rather have no debt than a slightly better balance sheet, especially if both balance sheets are excellent.
Having >60% of my net worth tied up in my house, whose value is directly correlated to the fortunes of the industry in which I am employed, would not help me sleep at night. Diversifying some of that into the broader equity and bond markets is more than just rate arbitrage, it’s smart risk management. In fact I would call that a smart decision even if rates were twice what they are now. Consider it an insurance cost. The fact that rates are dirt cheap makes this a no brainer.

nepats
Posts: 294
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Re: Relationship mortgage discounts for moving a million assets

Post by nepats » Tue May 14, 2019 3:25 pm

Having >60% of my net worth tied up in my house, whose value is directly correlated to the fortunes of the industry in which I am employed, would not help me sleep at night. Diversifying some of that into the broader equity and bond markets is more than just rate arbitrage, it’s smart risk management. In fact I would call that a smart decision even if rates were twice what they are now. Consider it an insurance cost. The fact that rates are dirt cheap makes this a no brainer.
Very good point!

Topic Author
softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Wed May 15, 2019 12:06 am

rsk wrote:
Mon May 13, 2019 12:37 pm
Before the relationship discount I couldn't get anyone to beat 3.75% on a 30 year fixed $1.1m loan. Wells offered 3.5% with $1m in new assets which I took to Citi, First Republic, and B of A. Citi and FR couldn't compete. B of A matched with $500k in new assets and a $1200 closing credit. Pretty sure I could have gotten more off on the closing but oh well.
BRAVO! .250 on a 1.1M mortgage is 2750 per year pretax.

pacodelostigres
Posts: 146
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Re: Relationship mortgage discounts for moving a million assets

Post by pacodelostigres » Wed May 15, 2019 9:19 am

HEDGEFUNDIE wrote:
Tue May 14, 2019 1:36 pm
saving4good wrote:
Tue May 14, 2019 1:34 am
HEDGEFUNDIE wrote:
Wed May 08, 2019 9:51 pm
First Republic needs to be on your list. I just refinanced with them at 2.65%.

Yes they use Pershing, but Pershing actually has some positives. For example you get access to DFA funds, no advisory fee required.
How long do you have to keep the funds at First Republic for? I assume you'd have to keep it there for the life of the loan, but how would they enforce this? Charge a fee to your checking account?
There is no enforcement.
pacodelostigres wrote:
Tue May 14, 2019 12:38 pm
If you had a paid off house, would you mortgage it for a million dollars to invest? If so, then this makes sense. Personally, my investment strategy is not that aggressive. My house has been paid off for many years and I've never been tempted to mortgage it just to have even more index funds.

Liquidity is good, but so is the flexibility of being unlevered when other life circumstances change. Having no mortgage allowed me to quit a horrible job with no plan. That kind of freedom is worth more than risk/interest arbitrage (to me), and is equally applicable to other scenarios like unexpected job loss. If the market tanks at the same time as a job loss or medical emergency, I'd rather have no debt than a slightly better balance sheet, especially if both balance sheets are excellent.
Having >60% of my net worth tied up in my house, whose value is directly correlated to the fortunes of the industry in which I am employed, would not help me sleep at night. Diversifying some of that into the broader equity and bond markets is more than just rate arbitrage, it’s smart risk management. In fact I would call that a smart decision even if rates were twice what they are now. Consider it an insurance cost. The fact that rates are dirt cheap makes this a no brainer.
Ahh, that's the disconnect. I'd never be willing to have a house at 60% of my net worth. Mine's less than 25%. If I were in that position I'd be downsizing and investing the proceeds, which isn't the same but at least rhymes. You're house rich and cash poor, relatively at least, so it makes sense that you want to own less net house. I'd just approach that differently.

Startled Cat
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Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Wed May 15, 2019 10:42 am

Did anyone who talked to Wells Fargo find out if they have a lookback period for assets under management? I'm trying to decide if I should move my WellsTrade accounts to a different brokerage (at a cost of $190 in transfer fees), in anticipation of possibly getting a relationship mortgage from Wells Fargo in the future.

BofA is also out of the running because I foolishly transfered assets to Merrill Edge in January and am waiting for the bonuses associated with those transfers. Unless I preemptively move everything out in July after getting the bonuses (or sooner?) and wait the two month lookback period in addition, BofA won't be a viable option. That doesn't leave many banks to choose from if Wells is also off the table. Citi? First Republic? Maybe HSBC, but after trying to navigate their website I have a feeling they're not a bank I want to deal with...

confused1
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Re: Relationship mortgage discounts for moving a million assets

Post by confused1 » Wed May 15, 2019 2:46 pm

Startled Cat wrote:
Wed May 15, 2019 10:42 am
Did anyone who talked to Wells Fargo find out if they have a lookback period for assets under management? I'm trying to decide if I should move my WellsTrade accounts to a different brokerage (at a cost of $190 in transfer fees), in anticipation of possibly getting a relationship mortgage from Wells Fargo in the future.
I was told my the WF Broker it only needed to be there for a few days. Assuming our appraisal is OK we will be getting the ball rolling and opening a WellsTrade account.

Why do you need to move the funds out? I don't think WF is asking for new assets

Topic Author
softwaregeek
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Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Wed May 15, 2019 7:45 pm

pacodelostigres wrote:
Wed May 15, 2019 9:19 am


Ahh, that's the disconnect. I'd never be willing to have a house at 60% of my net worth. Mine's less than 25%. If I were in that position I'd be downsizing and investing the proceeds, which isn't the same but at least rhymes. You're house rich and cash poor, relatively at least, so it makes sense that you want to own less net house. I'd just approach that differently.
That's because Hedgefundie and I both live in Silicon Valley. When I was younger, I bought a place for $650k. It seemed absurd at the time. Now worth 1.5M. I still own it as rental property.

So it's quite possible to have put down 200k on a house as I did 10 years ago and be sitting on a million plus in equity here.

Startled Cat
Posts: 415
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Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Wed May 15, 2019 9:01 pm

confused1 wrote:
Wed May 15, 2019 2:46 pm

I was told my the WF Broker it only needed to be there for a few days. Assuming our appraisal is OK we will be getting the ball rolling and opening a WellsTrade account.

Why do you need to move the funds out? I don't think WF is asking for new assets
Thanks, you may have just saved me $190. I assumed they were looking for new money. It sounds like BofA is.

confused1
Posts: 23
Joined: Mon Jul 27, 2015 12:03 am

Re: Relationship mortgage discounts for moving a million assets

Post by confused1 » Wed May 15, 2019 9:28 pm

Just been told it simply needs to be there for one day. Broker sees the funds and clicks a button to reduce the rate.

Topic Author
softwaregeek
Posts: 64
Joined: Wed May 08, 2019 8:59 pm

Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Wed May 15, 2019 9:49 pm

Startled Cat wrote:
Wed May 15, 2019 9:01 pm
confused1 wrote:
Wed May 15, 2019 2:46 pm

I was told my the WF Broker it only needed to be there for a few days. Assuming our appraisal is OK we will be getting the ball rolling and opening a WellsTrade account.

Why do you need to move the funds out? I don't think WF is asking for new assets
Thanks, you may have just saved me $190. I assumed they were looking for new money. It sounds like BofA is.
For me, both Wells and BofA were looking for new money. I had 500k at BofA, didn't count towards the total.

HEDGEFUNDIE
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Re: Relationship mortgage discounts for moving a million assets

Post by HEDGEFUNDIE » Thu May 23, 2019 11:06 am

Another 52 week low in the 10 year Treasury today.

Anyone up for another round of refinancing negotiations?

confused1
Posts: 23
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Re: Relationship mortgage discounts for moving a million assets

Post by confused1 » Thu May 23, 2019 1:17 pm

Got ours down to 3.125% 7/1 ARM Jumbo with $250k AUM

gougou
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Location: San Francisco Bay Area

Re: Relationship mortgage discounts for moving a million assets

Post by gougou » Thu May 23, 2019 1:33 pm

confused1 wrote:
Thu May 23, 2019 1:17 pm
Got ours down to 3.125% 7/1 ARM Jumbo with $250k AUM
Which bank? Citi or WF or BoA? I am looking to refinance soon. Possibly a cash-out refinance as well.
Last edited by gougou on Thu May 23, 2019 1:42 pm, edited 1 time in total.

confused1
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Re: Relationship mortgage discounts for moving a million assets

Post by confused1 » Thu May 23, 2019 1:34 pm

Wells Fargo

gougou
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Location: San Francisco Bay Area

Re: Relationship mortgage discounts for moving a million assets

Post by gougou » Thu May 23, 2019 1:36 pm

HEDGEFUNDIE wrote:
Thu May 23, 2019 11:06 am
Another 52 week low in the 10 year Treasury today.

Anyone up for another round of refinancing negotiations?
Yeah, I am actively looking. But I don't have a green card so Bank of America won't allow me to open a Merrill Edge account. So I am only looking at Citi and WF right now. Are there other banks that also offer good deals? I have up to $1M ready to transfer over from my Interactive Brokers account.

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