Can I Refinance Yet?

I know that I like the idea of being able to refinance the loan on my home, even though the market would not allow my home to appraise for the purchase price.

Why not? After all, I’ve never missed a payment, even at the higher rate. I’m a good borrower. I’d love to get 4.3% interest!

Heck, I just did it with my car. I went to a different lender and asked if I could give them the balance of my loan. They did it and it saved me 30% of my monthly costs.

Well, a proposed law would allow you refinance your home, even if you can’t get an appraisal for what you bought the home. You would have to have an FHA, or government backed, loan. There will certainly be other limitations, I’m sure.

It is called “Blanket Refinancing.” See more here and here. There are not many details as of yet.

So, this is the question that I want to throw out to you: Is this a good idea?

On one side, it will lower costs for 30 million home owners. Maybe they can start spending the money they save in the economy and get the economy moving again.

On the other side, the bond markets already reacted negatively when this idea was floated previously. If people don’t want to invest in bond markets because they are afraid that government interference could have some negative consequences on their profits, then maybe this could have some unintended consequences. Also, would it cost even more for our already-indebted federal government?

I don’t pretend to understand how this could be bad (or good) for the bond markets and, therefore, you and me….yet.

I will keep an eye on this and report more to you as I learn more. Stay tuned…