Remember when you were a kid and the simplest things intrigued you? When you parroted the reaction of those around you because you were learning how to react to something new, something you had never seen or experienced before.
That is how a lot of American’s must have felt when the most recent expansion to the Making Home Affordable Plan was announced on July 1st. For an explanation of the Home Affordable Refinance Program otherwise known as HARP see my previous post.
Now borrowers, who have loans backed by Fannie Mae and Freddie Mac, can refinance up to 125% of their home’s value. Sure this will allow more American’s to qualify for a refinance under the plan, but if you are one of those who now qualify you’ve got to be asking yourself, “Do I really want to do this?”
Well do you? Do you really want to refinance your house when the loan to value ratio is over 105%? That is what the government would like you to do, and now those who are between 106% and 125% loan to value can do it too!
Forgive me if I feel like a kid again. Like a kid who just saw fireworks for the first time and can’t figure out if it is great or just, as my grandfather used to tell me, “Like burning money”.
Don’t get me wrong, I like fireworks and fanfare just as much as every other red blooded American. But who among us enjoys being told something will help when in reality doing that very thing is not in our best interest? I don’t know about you, but I like it even less when I find out later that those who it is really helping are those among us need help the very least.
So, light your fireworks this 4th of July and burn a little money to celebrat our independence. But before you exercise your freedom to light the big fat stick of dynamite the government just put in your hands, think about the first time you held a firecrecker too long and how your fingers felt. Oh and don’t forget to multiply that feeling by 125.