Some people in my neighbourhood are still doing cash-out refinancing of their houses. I suppose it is marginally better than having outstanding home equity lines of credit if the balances are large, but doesn't one have to pay application fees, discount points, credit checks, appraisal fees, documentation fees, title search costs, et cetera? A regular refinance here could cost $4200-$6900. And the terms are usually for 30 years, regardless of the ages of the mortgagees. So four mortgage refinances over a decade, not uncommon where I am, cost close to $22000. Now, if the mortgages were for shorter terms and smaller interest, the costs would not be so cumbersome. I paid close to nothing for my refinance and neither shortened nor lengthened my term but I saved $8700 in interest. But if the amounts are larger and the terms remain constant, that is prolonged, the interest saved is not as significant.
Our newspapers used to present "oh woe" articles of people who have lived in their houses for most of their lives, but somehow did not mention the frequent mortgage refinances, always for larger amounts. And articles of the "we are underwater on our mortgage and have lost our equity" sort and it turns out they got 0% down or interest-only mortgages. Values in our area dropped from the 2007 peak by 30% by 2011, which is not long ago.
I weep for the future of your country. About half of these people vote too and nearly all have good, professional jobs. Or maybe it is just that many people in my neighbourhood are clueless. That seems most likely to me.
I Don't Understand Some Homeowners
June 23rd, 2012 at 03:31 pm
June 23rd, 2012 at 08:43 pm 1340484228
June 23rd, 2012 at 10:11 pm 1340489472
June 23rd, 2012 at 10:13 pm 1340489628
June 24th, 2012 at 10:09 pm 1340575789
Jerry
June 25th, 2012 at 02:29 am 1340591377