file under barn door, locking, after horse's departure: how to assess a refi

[walkitout]

I didn't have a mortgage long enough to make a refi compelling, but I always found them pretty mystifying anyway. Having seen the Boston Herald (yeah, sorry -- linked to it from elsewhere) reporting on the how-many-refis for properties in foreclosure vs. those not, I've got a couple of rough metrics for anyone contemplating a refi:

(1) People started in prime and wound up in subprime. Don't do that.
(2) The principal owing increased across the refis. So if you refi, make sure the total owing has not increased unless you've got a damn good reason for it (e.g. R. took $15K out to build a garage, which increased the value of the hom e by more than that -- this is plausible, but still not without risk).
(3) The term of the loan should stay the same or go down.

Arguments based on payment are what got people into a mess in the first place; don't let someone play three card monte with the most debt you'll probably ever have.

Term should shorten.
Debt should shrink.
You shouldn't allow yourself to slide down the tiers of debt.

Comments

[ethelmay.livejournal.com]

There's also the point that they won't LET you refinance if your balance is low enough that it would make a huge difference in your payment. Otherwise everyone would. We actually *tried* to refinance when we were doing the house remodel, but they were all, like, "What? You mean you *don't* want to borrow another couple hundred K? You just want to reduce your payments? You're no fun. We take ball, go home."

that is just _wrong_

[walkitout]

I guess that's why the people at the mortgage companies who interact with borrowers are called a sales department. Geez.