Personal Finance, The Home 
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Refinancing Offers

Within mere minutes of buying my house last year (alright, that’s a bit of an exaggeration), the mortgage loan companies jumped on the opportunity to offer refinance, home equity lines of credit, and other “tempting” offers to restructure the first and second mortgages I just agreed to. What surprises me is that those offers work often enough that the mortgage companies would be willing to send out the offers in the first place (companies aren’t stupid, if it doesn’t work, they stop doing it). In all fairness, some of them were offers for an adjustable-rate mortgage which meant a ridiculous low rate but if I really wanted an ARM, I would’ve signed up for one in the first place. I have your vanilla 30-year fixed mortgage with a competitive interest rate and I just paid all the mortgage-related closing costs… what would lead them to believe I’d be at all interested in paying those fees again and refinancing???

Have you ever heard of someone refinancing so soon after buying a house? Would it even make any sense?


 Personal Finance 
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Carnival of the Vanities – Jan 25th 2006 Edition

The Carnival of the Vanities makes a brief one-week stay here at my humble blog and I’m glad to be able to present so many interesting articles. I won’t spend any more time fluffing it up, here is a nice collection of 43 posts representing the best of the blogs they’re published at. Enjoy!


 Credit, Personal Finance, The Home 
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Prepayment Penalties are Illegal in Maryland

I didn’t know this when I bought my house but prepayment penalties are actually quite illegal in the state of Maryland. This link is to the story of a man who refinanced his home with Provident bank, who agreed to waive his closing costs (of around $700) as long as he kept the loan for 3 years. Well, he didn’t keep it for 3 years and so they dinged him for the closing costs. The lawyer’s claim is that since the only way to trigger this fee is when you prepay your loan, it’s a prepayment penalty. If it looks like a duck, smells like a duck, and quacks like a duck… it’s a duck.

I’m a little split on this because on one hand, prepayment penalties are illegal and it sure looks like a prepayment penalty. On the other hand, he knew what he agreed to when he signed his refinance documents. It looks like he discovered the payment was illegal after he signed the documents (and made the payment) and now wants to save himself the $681 and earn himself an extra $1400 plus interest… that doesn’t sit well with me.


 Frugal Living, Personal Finance 
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Festival of Frugality #7

Canadian Capitalist is hosting this week’s Festival of Frugality, 7th edition, which is fat with seventeen entries.

Next week, Sarah at Frugal Underground will be our host so please send along your submissions via the forms at Conservative Cat or Blog Carnival. If you’re interested in hosting, please contact me after reading what this Festival is about.


 Government, Taxes 
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Income Tax System Collapse in 10 Years

I discovered this via Digg and it’s a really interesting piece by Thomas Frey about how our income tax system is to be reborn (I’m sure this title, borrowed from Frey, is sensationalistic) within the next ten years for a number of reasons, all of which make sense, which he lists and explains. All ten reasons are pretty valid and the ones that resonate more are listed near the front (increasing complexity, improved technology and anonymous money, terrorism, etc.). Despite the complexity of the topic, is a really easy read and something you should check out.


 Banking 
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Certificates of Deposit Aren’t Worth It

Certificates of Deposit (CDs) no longer offer an attractive enough interest rate for it to be worth it. If you take a look at ING Direct’s Orange CDs, you’re looking at a 6 month commitment earning you a mere 4.15% APY compared to their regular rate of 4.0% APY on their Orange Savings account. So the difference in earned interest is $1.50 more for a CD when you lock it up for 6 months. If you’re willing to lock it up for their longest time period, 5 years, the difference is $7 a year. (Since both rates are taxed as 1099-INT income, the difference in earnings is the same so we can ignore that mathematical step for simplicity’s sake)

If you were to find the rates at PenFed (reddish pink box at the right), probably one of the most generous rates around for CDs, you’ll see that a 6 month rate is 4% APY, no difference. Slide down to the 5-year CDs and the APY of 5.75% means a difference of $17.50 per year when your money is locked up for five years.

Are you willing to be paid an extra $17.50 a year to not really be able to get to your money? I’m not.


 Investing, Personal Finance 
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Carnival of Investing #6

I have the pleasure of presenting to you the Sixth Carnival of Investing. Without further ado or unnecessary fanfare, here is this week’s investing highlights:

If you’re interested in learning more about this Carnival, visit Retire at 30 for more information.


 General 
5
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Here we go…

Steelers Logo

Pittsburgh’s going to the Super Bowl!


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