We Can Only Blame Ourselves

The sky is falling, the sky is falling! For the last several years, we've all been inundated by junk mail from various mortgage companies offering us the chance to refinance and make lower mortgage payments. For years we've been refinancing to pay off our credit card debt, then turning around and running our credit card debt right back up. Industry experts said this couldn't go on forever, and we turned a deaf ear.

For those of you who are paying the piper now -- whether you're a borrower or a lender -- I can only say this. You were warned, and you can only blame yourself if you're in trouble now. Yes, I'm speaking from experience. I bought my house roughly seven years ago. I wasn't a stellar borrower, but I wasn't a high-risk borrower either. A couple of years went by, interest rates declined, my credit was a little better than when I had first bought the home, and I refinanced. But I was smart about it. I waited until the rates had dropped enough to actually make a refinance worthwhile -- over both the short term and the long term -- and I refinanced at a fixed rate.

I distinctly remember the day I signed the refinancing paperwork. I was sitting across the table from the loan officer reading the paperwork, when she casually pulled out a second set of papers and said "You know, if you refinanced with a variable rate loan, you could save an additional X amount per month."

"Really," I asked?

"Yes sir."

"Okay. So how much will I save when the interest rates hit Y%?" My question was met with silence. "Okay, let me ask you this... interest rates are at an all-time low, right?

"Yes sir."

"And by signing my original paperwork, I'm locking myself into a payment of $Z per month, for the duration of this loan, right?"

"Yes sir."

"If I take this variable rate, I'll save $X per month..."

"For the next two years, sir."

"Right, but statistically speaking, the chances of interest rates staying this low for the next 30 years are virtually non-existent, right?"

"Well, I can't predict that sir."

"Exactly, but I can. Interest rates will go up, and I'll end up paying hundreds more, probably thousands, somewhere down the road." Again, I was met with silence. "That's what I thought. I'll stick with the original offer, thank you very much."

"Yes sir."

Here's my point. Yeah, I paid a little more up front, but I know how much my mortgage payment will be, from now until it's paid off. And I'm saving thousands over the long haul. The average consumer didn't think past their next month's payment, and the average lender only saw the extra dollar signs in the future. Neither thought far enough ahead to realize that more people would default. It was all greed, greed, greed. And you've only got yourselves to blame. I'm glad I looked ahead.