Economic Conversation

President Obama continues to offer amazing opportunities for those who want to refinance.  He recently extended the Making Home Affordable Refinance Plan to 125% loan-to-value.  This is almost unheard of as you can have a large amount of negative equity in your home and still have the opportunity to refinance.  The problem I see with this is that mortgage lenders are going to be very discretionary with who they offer low rates to.  I would be willing to bet that if you have 125% loan-to-value on your current mortgage, your refinance rate will be NOTHING close to those low advertised rates of 5% and under.

I think that President Obama is working diligently and hopes to help all Americans to save money, but some home owners should not be allowed to refinance.  I realize that many people have seen the value of their homes decline greatly because of others mistakes, but there are people who are very bad with their money and as soon as they refinance, they are going to waste all the money saved by refinancing.  Ultimately, the mortgage lenders realize this as well by just taking a look at the credit score of the individual applying for a refinance.

If you have made intelligent financial decisions, President Obama is willing to help you out in many ways, including refinancing.  The troubling issue is that many of the people who have made very bad financial decisions will now get to refinance and they are going to waste away more money like they have in the past.