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Article: Many homeowners overextending with cash-out refinancing
- Article from:
- St. Joseph News-Press
- Article date:
- January 23, 2003
- Author:
CopyrightCopyright 2003 St. Joseph News-Press. Provided by ProQuest LLC. (Hide copyright information)
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It's awfully tempting - all that money tied up in your house.
Why let it just sit there? Why not get it out - spend it on a
vacation or pay off your credit-card bills?
Hordes of American homeowners have pondered these questions and
decided that they do indeed have better ways to use that money.
Soaring home values and low interest rates have spurred so-called
cash-out refinancings, in which homeowners take out new mortgages for
more than they need to pay off their old ones.
Suppose you owed $200,000 on a 30-year mortgage charging 8
percent. By replacing it with a 6 percent loan, you could borrow
$245,000 and still pay the same $1,468 a month. After paying off the
old loan, you'd have $45,000 ...