I am a pesky question asker. Face value is never good enough for me.

For example, I recently received a piece of mail advertising home equity mortgages. The attention grabber on the front of the envelope said, "Life. Dream It...Live It!" I would add, "Pay cash for it!" But the cover showed a picture of popular vacation spots, a college graduate, an expensive sportscar, and other common activities and things that people borrow money to obtain. The people look so happy and fulfilled.

Then I noticed the interest rate: 1%. What a deal! I read more, dreaming of refinancing my own small mortgage which is currently at 5.5% down to only 1%. All the while, however, I had a pesky voice in my head playing the devil's advocate, asking me all sorts of pesky questions and telling me that it was too good to be true, so I searched for the fine print. I had to get out my reading glasses to see the very, very small print, which stated that the payment rate was only 1%, but interest would continue to accrue at 4.344% annually. "Interest rates subject to change..." (ie. We will hook you with this low rate, but when you apply, the interest rate will have almost certainly gone up.)

The kicker was this phrase: "Certain payment options may result in an increase in principle balance." Duh! If my interest rate is 4.344%, and I am only paying 1%, I am going 3.344% farther into the hole every year!

But what about the memories I could build with my husband and kids if we borrowed the money for a special vacation? What about sending my oldest daughter off to the college of her dreams in the fall, rather than asking her to attend our local university?

Yeah, what if we get in over our heads in debt and can never retire because we still have a house payment at age 65? What if our business goes under and the mortgage company forecloses on us? What if I can't pay for our daughters' weddings (I have four of them to fund!) because I am still paying for the oldest daughter's expensive education?

I think that this add appealed to me initially because it sparked the dream inside of me, that part of me that craves excitement. But when I really thought about it and searched my heart, excitement is not what I am really after. What I truly want is peace: peace knowing that no one can take my house from me, that I have money in the bank for emergencies and eventually for retirement, and that I will be able to pay for the things that are most important (like weddings, education, and modest but memorable vacations.)

I am still going to check out this deal; 4.344% is still a great interest rate. If I refinance only what I owe on my existing mortgage down to this rate, but still pay the same amount that I am paying today, I will be able to pay off my mortgage with lightning speed! (more about that in future blogs for those of you who think that it is smart NOT to pay off your mortgage...) But I will ask some very important questions, such as, "Can I pay extra on the mortgage without penalty?" and, "Can I lock in the interest rate?" as well as, "What are the closing costs and points associated with this mortgage?"

I am a pesky question asker...but I am NOT broke! I hope that you are, or will become, a pesky question asker, too.

Posted on Sunday 28 of August, 2005 [16:41:54 UTC]