This reminds me of a friend of mine. He and his partner bought a brand new house about 7 years ago. They bought with no money down, but got a fixed rate. They have a spending problem, and have re-financed 3X since the purchase. They are always buying things….large screen TVs, Honda Acura, and even remodeled their kitchen! (Wow is that necessary in a new house?) For 2 of their re-fi’s, they borrowed a significant amount of change from me–though, my friend tells me I am a “ghetto dweller” as I live in North Park, and drive an older car. They did pay me back, but I told them that was my LAST time loaning them money.
Anyway, the last re-fi they did on an ARM and it adjusts in March. My friend may lose his job in February. They already have a roommate, and cannot increase her rent anymore. His thought is, either the bank does a re-fi at a fixed rate, or they can have the house. His belief is that in today’s market, the bank will work with them. A couple of months ago, he pulled all his retirement money to pay off CC bills. So, now who is going to support people like this when retirement comes around?
If the bank does not work with them, they will bail and let the bank have the house. I have no doubt that they will continue to spend like crazy, as I have known them 15 years and this is what they do. I don’t wish him any ill will, as he is my best friend, and if the bank wants to take the loss, then that is on the bank. However, it really irks me.
