refinance catch

here's another thing that's very very very bad for you but good for society. society keeps quiet or hush hush about this of course because although it's bad for you, it's good for the country. it's like shopping - for a huge majority in society - shopping is a hobby - and buying things you don't need is never talked about as a problem because although it really is bad for you, it's good for the economy. shopaholics are the heroes of the economy.

in america if you have a loan on a house, example 30 year loan, the first 10 years you really are just paying interest. your loan only decreases very little. even my father who has a masters in economics was not aware of this. so for the first 15 years it's almost like you are just renting your house - and the bank is making all the money without decreasing your loan. so in the beginning, THE BANK IS LAUGHING AT YOU.so in the beginning - YOU ARE THE SUCKER.

however, during the later part of your loan, it's your turn to laugh at the banks - because the portion of your monthly payment going into decreasing your loan becomes bigger. in fact in the last 10 years of the loan, it's almost like you are borrowing money for free because it's almost like you are not paying interest anymore. this time - YOU ARE THE ONE LAUGHING AT THE BANK..

it's been more than 10 years since i bought the house for my parents in palm springs. SO OF COURSE THE BANK GIVES ME A VERY SWEET LOOKING REFINANCE OFFER - if i refinance, my monthly payment will be $650 instead of $900.any normal person will right away jump at that offer. you know why? BECAUSE THEY ARE IDIOTS !!! here's why ...

if i'm paying $900 a month and $650 goes to decreasing the loan - that means i'm really just paying ($900 - $650) = $250 a month.  that's because a $650 decrease in the loan means a $650 increase in your equity = money that is yours.

when you refinance - although your monthly payments are now lower, you are now back to paying mostly just interest. only $50 goes towards paying your loan, so  you are paying $600 a month, instead of only paying $250 a month if you don't refinance.

now you might say, well, how about the cost of money you are benefitting from paying $250 less a month? ARE YOU KIDDING ME? that's only like $15 a month cost (assuming 5%  interest on $250 a month) - so small compared to the $350 a month extra you really are paying. besides, the time factor for the cost of money is really not that much because anytime you sell your house, the equity is yours right then and there - straight to your pocket. so if $650 is going to your loan, which also means it goes to your equity,  that's $650 * 12 months = $7,800 a year. let's say you sell your house in 3 years = that means $7,800 X 3 years = $23,400 extra in your pocket because you did not let the fucking bank fool you into refinancing.

I MEAN C'MON = 3 YEARS IS NOT THAT LONG. AND $23,400 IS A LOT OF MONEY.

the bank wants you to refinance because it wants you to continue renting the house from them. they want to keep owning the house and you just pay the montly rent. you know that just because you bought the house, it's really not yours right? meaning if you lose your job and stop paying that humongous monthly payment the bank will kick you out of your house right? unless you paid cash, the term "homeowner" is really misleading and gives you a false sense of security. .

now you might ask, why would a bank do such a thing? especially a very reputable and famous bank like citi or bank of america? well, just read this  - http://finance.yahoo.com/news/bofa-put-toxic-debt-bond-140636871.html  . i mean, even if the workers in bank of america told their bosses not to do it because they are literally cheating the investors - they still went ahead and did it anyway.

what's amazing to me is that the letter came in a fedex express envelope. oooooooh. wow. this must be important because it's fedex express which is like $10. pretty expensive for a junk mail. well, it's not really junk mail for most people who are idiots. then of course in the letter they say "as a valued client, you have the opportunity to receive the relief on your mortgage payments". ooooooh !!! wow !!! i feel so lucky today because citi bank gave me relief on my mortgage payment.  hahahahaah !!! i just love it !!! IT'S NOT RELIEF IF YOU LITERALLY, MATHEMATICALLY, AND PHYSICALLY ARE PAYING MORE YOU MORONS !!!

and then the second page has this huge table where they show you the usual refinance costs and on the second column shows you pay 0, zero, nada, nothing. WOW !!! that is amazing. this is almost like $2,000 in savings !!! hahahahaha !!! what savings? HOW CAN IT BE CALLED SAVINGS WHEN LITERALLY, MATHEMATICALLY, AND PHYSICALLY YOU ARE PAYING EASILY LIKE $400 A MONTH MORE on average for the next 15 years. HAHAHAHAHA !!!

(for more of my knowledge bombs, click the "ian's knowledge bombs" banner at the top of this article and choose any article in the table of contents that piques your interest)