TOO MUCH OF A GOOD THING

The furnace is fixed and I can once again post without the annoying sound of my chattering teeth in the background, so let's get back to refinancing. This morning's news included reports that the average rate for a thirty-year fixed mortgage has dropped to 4.9%. And word on the street is that we may see rates rise again by the third quarter of this year, if not before. Sounds like time for a refi, right?

Certainly time to explore the option. We've already talked about finding out whether you've got enough equity in your home to qualify for the refi without plunking down a lot of cash. For the past decade or so, people went around thinking a house was something you yanked equity out of whenever you needed some spare cash, sort of like the proverbial money tree. Lots of homeowners feLL into that wrong-headed and short-sighted view. They called it leveraging, which is all well and good till the bottom drops out, the equity dries up, and you have to plunk down a chunk of change or ruin your credit with foreclosure and possibly bankruptcy. And till the combined effect of all those equity draws sends the economy into a tailspin.

You don't hear much about HELOCs, or Home Equity Lines of Credit, these days. Same for cashout refis. And that's a good thing. Because a lot of people in our industry saw a piece of our current financial crisis coming a long ways back. People ratcheted up their spending, buoying up the economy with money extracted from inflated "values" that were bound to come down. There's a lot of talk these days about consumers not spending like they used to. A whole lot of that is wrapped around the fact that we were spending too much before, drawing on equity in our homes that flipped itself around quicker than you can say "mortgage crisis."

So quit blaming the folks who got low-income, government subsidized loans. Most of them had to plunk down their own money to do so. It's the rest of us who are really to blame, living hot-fat off programs that encouraged us to borrow at no cost against values we didn't really have. But no one wants to hear that. It's a lot easier to blame the poor.

All right. Off my soapbox. Next we'll talk about interest rates and timing your refi.