I already knew that!
want to be told what to do and not do, I know. We are big people
now and it can be just galling to have someone
tell us what to do, especially when it comes to our money. We’re
not kids anymore after all . . . are we?
Of course not!
We really don’t need some newsletter schlep
trying to come off like an expert on us. For example, we don’t
need to hear about one of the biggest mistakes people make in their
personal finances. We know that this no-no can be devastating to
the attainment of personal financial freedom. Yup, we know that
borrowing against our home equity is a financially dangerous thing
to do. Clearly, if someone borrows against the equity in their
home to pay off credit cards or other consumer debt, they are likely
in for trouble. We know that the reality is that very, very few
people who take equity out of their home for this ever get ahead.
After all, if someone is of such a mindset to run up credit card
debt, just paying it off with stolen equity does not change them
so they no longer have the bad habits that got them there in the
first place, right? You know just like I do that Americans borrowed
$701.5 billion last year directly out of the equity in their homes.
We won’t fall for the advertising and hype paid for by the
lenders themselves. No way! We are too smart, too unemotional to
be sucked into following the crowd.
What else do we know that would keep us from taking money out
of the greatest single asset that most will ever have?
- Each time
we refinance, our mortgage is reset to 30 years; unless a 15-year
mortgage is chosen, which is uncommon for equity snatchers.
No wonder fewer and fewer people are enjoying the security
satisfaction of completely owning the home they live in.
are front loaded so that in the beginning years, a far greater
percentage of the payment goes toward interest
and not principle.
This means that every time we refinance, we suffer through
those early, high-proportionate interest years all
time we refinance, we are giving a huge bonus of interest paid
to the lender, and reducing the dollars applied to
time we refinance, we pay high closing costs; which in reality,
is money forever lost, unless we are getting
a far lower interest
rate without taking out equity.
refinancing, 2/3 of borrowers just continue to rack up consumer
debt and have it all back within
Yup, we don’t
need anybody to tell us these things. After all, it’s only
good common sense. But, just between you and me, I have to ask
you an embarrassing question. If we know–in the vast majority
of cases–that refinancing our homes to get cash usually puts
us farther in the hole, why are we doing it
Hmm . . .
Cooper is the Director of OnlineOption.com,
a training and support Web Site for both beginning and advanced
traders. Over the past four years, Dr. Stephen Cooper has been
the primary Stock Market Trainer for Mark Victor Hansen and Robert
Allen’s Enlightened Millionaire Institute. He has taught
thousands of students his proven trading strategies. He is the
author of The Online Option Trader, Windows to Wealth,
Truth About Money. He has also authored 10 interactive chart
analysis tutorial CDs and contributed to several newsletters