CatB may be wondering if she should wait for lower prices and risk being in a higher loan rate environment, What do you think?

There is a fallacy that “you can always lower your payments by refinancing.” First, you may not be able to refinance if your income or your equity is shaky. Second, the savings may not be real savings.

It’s a dirty little secret that most of the homeowners who are under water got there through refinancing, not by borrowing for their initial purchase. It was tempting to buy new kitchens, cars, vacations, college educations and just junk by using cash-out refinancing products. These products were given out like candy.

While housing prices were going up, the value in equity was burning a hole in a lot of people’s pockets. Homeowners felt rich. If you paid $250,000 for a house that’s worth $500,000 five years later, you are $250,000 ahead, right? Wrong. It seemed perfectly reasonable to borrow only $50,000 or $100,000 of the profits. Right? Even more wrong. Even though the house may be worth $425,000, in 2011, it was not a good idea to borrow against the equity.

Cost of the refinancing service: even if you get a “no points, not closing cost” loan, you are paying for it somehow. Sometimes the rate is higher than a mortgage with more fees. Sometimes the fees are added into your principal.