Comments on: Beware the Cash-Out Re-Fi http://toughmoneylove.com/2008/11/28/beware-the-cash-out-re-fi/ The Hard Truth about Money and Personal Finance Mon, 15 Mar 2010 15:37:50 +0000 http://wordpress.org/?v=2.9 hourly 1 By: Mr. ToughMoneyLove http://toughmoneylove.com/2008/11/28/beware-the-cash-out-re-fi/comment-page-1/#comment-1728 Mr. ToughMoneyLove Mon, 15 Dec 2008 05:53:51 +0000 http://toughmoneylove.com/?p=179#comment-1728 Simply40's: Wouldn't be nice if a lender could force a borrower to surrender their credit cards as part of the re-fi deal? Simply40’s: Wouldn’t be nice if a lender could force a borrower to surrender their credit cards as part of the re-fi deal?

]]> By: SimplyForties http://toughmoneylove.com/2008/11/28/beware-the-cash-out-re-fi/comment-page-1/#comment-1677 SimplyForties Fri, 12 Dec 2008 15:49:34 +0000 http://toughmoneylove.com/?p=179#comment-1677 Excellent advice. The cash-out re-fi is so tempting to so many. I personally know of several people who did this to pay off credit card debt. Within a year or two these people had charged their cards right back up again. Not a great plan! Excellent advice. The cash-out re-fi is so tempting to so many. I personally know of several people who did this to pay off credit card debt. Within a year or two these people had charged their cards right back up again. Not a great plan!

]]> By: Miranda http://toughmoneylove.com/2008/11/28/beware-the-cash-out-re-fi/comment-page-1/#comment-1441 Miranda Mon, 01 Dec 2008 13:25:12 +0000 http://toughmoneylove.com/?p=179#comment-1441 Ah, the cash-out re-fi. That's one of the many reasons we're where we are at right now. Using homes (that have fallen in value) to better participate in consumerism. Especially now, a cash-out re-fi can result in negative equity as home values continue to fall. And that's not good for your finances at all. It's important to remember that mortgage is debt. It may be considered "good" debt, but it is debt nonetheless and should be paid off as quickly as possible. Ah, the cash-out re-fi. That’s one of the many reasons we’re where we are at right now. Using homes (that have fallen in value) to better participate in consumerism. Especially now, a cash-out re-fi can result in negative equity as home values continue to fall. And that’s not good for your finances at all. It’s important to remember that mortgage is debt. It may be considered “good” debt, but it is debt nonetheless and should be paid off as quickly as possible.

]]> By: Mr. ToughMoneyLove http://toughmoneylove.com/2008/11/28/beware-the-cash-out-re-fi/comment-page-1/#comment-1405 Mr. ToughMoneyLove Sat, 29 Nov 2008 04:14:03 +0000 http://toughmoneylove.com/?p=179#comment-1405 @MGL: If this market stays flat for years (which is a distinct possibilty) you will be quite content with the return on paying off your mortgage. That's what I am counting on. @RDS: If a borrower has enough equity to pull out cash to start a business or invest in another property, wouldn't it make more sense to do a HELOC? @MGL: If this market stays flat for years (which is a distinct possibilty) you will be quite content with the return on paying off your mortgage. That’s what I am counting on.

@RDS: If a borrower has enough equity to pull out cash to start a business or invest in another property, wouldn’t it make more sense to do a HELOC?

]]> By: RDS @ Smart Financial Values http://toughmoneylove.com/2008/11/28/beware-the-cash-out-re-fi/comment-page-1/#comment-1404 RDS @ Smart Financial Values Sat, 29 Nov 2008 03:09:47 +0000 http://toughmoneylove.com/?p=179#comment-1404 Like all debt, the cash out refi can be dangerous, but can also be worthwhile depending on what it is used for. If you pull out money in order to start a business or invest in another property (if the numbers add up and you can afford it) then it might be a good move. However, I somehow suspect that the bulk of cash out refis from the past decade were not used all that responsibly. Like all debt, the cash out refi can be dangerous, but can also be worthwhile depending on what it is used for. If you pull out money in order to start a business or invest in another property (if the numbers add up and you can afford it) then it might be a good move. However, I somehow suspect that the bulk of cash out refis from the past decade were not used all that responsibly.

]]> By: MoneyGrubbingLawyer http://toughmoneylove.com/2008/11/28/beware-the-cash-out-re-fi/comment-page-1/#comment-1401 MoneyGrubbingLawyer Fri, 28 Nov 2008 14:50:40 +0000 http://toughmoneylove.com/?p=179#comment-1401 Pulling out a bit of cash during a re-fi can be a very tempting option for many people, and banks are more than happy to push this option. One bank here uses the tagline "You've got more money than you think! Let us show you how!" or something along those lines. I've got a number of family members who have recent bought all kinds of fun things (new kitchen, cottage, motorcycle- you know, real necessities) despite often complaining about how little money they have. When I gently ask what bank they robbed, they tell me they took out some cash when they refinanced. It's as simple as that! Even more troubling is that some of these people make a regular habit of this, doing it every few years. My goal is to get rid of my mortgage ASAP, not keep upping the amount to finance new toys. Apparently, that makes me "cheap". Pulling out a bit of cash during a re-fi can be a very tempting option for many people, and banks are more than happy to push this option. One bank here uses the tagline “You’ve got more money than you think! Let us show you how!” or something along those lines.

I’ve got a number of family members who have recent bought all kinds of fun things (new kitchen, cottage, motorcycle- you know, real necessities) despite often complaining about how little money they have. When I gently ask what bank they robbed, they tell me they took out some cash when they refinanced. It’s as simple as that! Even more troubling is that some of these people make a regular habit of this, doing it every few years.

My goal is to get rid of my mortgage ASAP, not keep upping the amount to finance new toys. Apparently, that makes me “cheap”.

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