Yes, I am a member of those who refinanced during the big drop in interest rates. Big surprise eh? Tons of people did. It was great fun. Lower payments, extra cash. Who in their right mind thought it would go on forever and that you could just re-finance, re-finance and re-finance until you decided to move and then you could re-sell at more than what was owed?
I have no finance background. But I knew my house (which doubled in value in 2years) had jumped up ridiculously high. I knew there was no guarantee it would stay there. (as luck would have it, it did) You make your plans based on reality. Not on what some goofy mortgage lender is promising. Don’t you??
And yes, sh** happens. You lose your job, you have to move at a bad time, you get sick. Those are exceptions. And surprises. You don’t get surprised by prices falling and interest rates going up.
As long as home prices were rising, these borrowers could refinance their loans or sell their properties to pay off their mortgages. But now, with prices falling and lenders clamping down, homeowners with solid credit are starting to come under the same financial stress as those with subprime credit.