#295 More Gouge

So I’m thinking of getting a small amount of money out of my house. The thought of a refi occurred to me. I’ve read a lot lately about creative financing options. Back in the days when interest rates were going down it was hard to lose on a refi. If you planned to stay in your house at least five years, you could roll in your fees and because you saved on interest on the other end, everything was wavy gravy. Not so these days. You have to borrow out the max of your equity to make it worthwhile. It’s not possible to refi to only pull out 10,000 worth of equity because a) interest rates are likely to be higher than what you were paying and 2) the fees are based on the total loan amount—which means the entire new mortgage. So let’s say you have a current mortgage of 70,000 and you want to add an additional 10,000 to the loan. If the points or fees are one percent, you’d figure hey great, only 100 bucks. But no, the fees or points are for the full new loan so it’s actually the 100 for the 10,000 and an additional 700 for refinancing the original mortgage loan amount. Mortgage? More gouge is more like it. I guess that’s why people are willing to pay higher interest for a home equity loan. You only get charged on the currency you are currently borrowing. Still, I guess I’m in pretty good shape. I read an article the other day that lenders are now actually offering a fifty-year mortgage. All right! I’ll be able to pay it off when I’m 105. Oops. That will certainly add a new wrinkle to one slot in the universal mortgage loan application, date of birth. And lenders, along with all their other loan logarithms and factor scales, along with their credit scores and their home appraisals and flood determination reports, are going to have to add mortality actuarial tables to the mix. So you got your amortization scale and your actuarial tables. Mortgage and mortality. Sounds like a perfect opportunity for life insurance—you know, when banks offer you loan insurance or mortgage insurance and all that, in case you die. Then the house will be paid off and your survivors won’t have to worry, and more importantly, the bank will be paid off and they won’t have to worry. I think they’ll actually start requiring it if you’re pushing the limit on a fifty-year mortgage. Interestingly, the whole idea works out well with folk etymology too. The word mortgage breaks down into the two syllables mort and gage. Mort is short for mortality—as in death. Gage sounds like the phonetic equivalent of gauge. Meaning a device to measure. Mortgage becomes a death-measuring device. Or, if you’ve got the worry of a fifty-year mortgage hanging over your head, a death provoking device. Actually I think the 50 year mortgage’s time has come. It’ll go quite well with a 20 year car loan—on a car that costs as much as my first house. Bet bankers were happy to hear Americans are living longer these days.
America, ya gotta love it.