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Refinancing old house is old hat

It's strange how even the largest business deals can become routine if you repeat them often enough.

No, I'm not talking about Enron executives cooking the company's books.

I'm talking about refinancing a home mortgage.

For most people, taking out a loan for a home is the biggest financial transaction they will make in their lives.

I remember when we bought our house in 2000. To say I was intimidated by the home buying/mortgage application process is to massively understate my feelings.

Even now, when I look back on those days, I can remember the churning in my gut. It felt like I was signing . . . and signing . . . and signing my life away. When I looked at the statement showing how much interest I'd pay over the life of the loan, it was like taking a sharp blow to the solar plexus. Let's just say there was a certain amount of gasping for air.

Our loan officer, who also happens to be a cousin of mine, likes to joke that she thought I was going to be physically sick several times during the process.

But since then, I've become a much bigger fan of mortgages.

First, I discovered the tax benefits of home ownership. Then, about a year after we bought our house, my cousin suggested that interest rates had fallen to the point that we should consider refinancing.

I was actually excited at the prospect. Here was a chance to take a swipe at those interest payments!

So, we refinanced, congratulating ourselves on catching rates at their low point.

But the rates kept falling. And falling. And falling.

Last week, the rate on a 30-year fixed-rate mortgage fell to 5.61 percent, another record low, according to Freddie Mac, which started keeping records in 1971. And a possible war with Iraq and weak economy mean "any sustained rise in rates is highly unlikely," said Amy Crews Cutts, deputy chief economist at Freddie Mac, in a Bloomberg story. "We expect interest rates for fixed-rate mortgages will stay around 5.7 percent in the near term — good news for housing markets, which should be even stronger this year than in 2002."

That strong housing and refinancing market is already playing out. According to another Bloomberg story, the Mortgage Bankers Association of America's most recent reading of its mortgage applications index increased to 1,603.1, the highest since the group began keeping track in 1990. The refinancing index skyrocketed 34.9 percent to 8,920.9.

What does all of this mean? It means thousands of Americans are rapidly becoming — or at least think they are becoming — refinancing experts. And for good reason.

The Wall Street Journal quoted experts last week as saying anybody who has a mortgage higher than 6.7 percent should refinance now, even if they have refinanced several times before.

"Some lenders say you should refinance every time rates fall a percentage point below your current rate. But many borrowers are refinancing for much smaller increments, especially if they can get a new mortgage with low fees and they intend to be in the house for many years," the Journal article said.

So, for the third time in four years, I find myself signing mortgage papers, hoping to take another bite out of those long-term interest payments and free up a little cash in the process.

I'm certainly not feeling sick as I ponder what to do with the extra $100 or so I'll have to play with each month. I'm sure my wife will come up with a few projects around the house. And we'll be able to save more for a summer trip to Disneyland.

Regardless, it's nice to know I can continue doing my patriotic part to pump up our struggling consumer economy while saving some money, too.

That's a pretty good combination, and it's even better now that the mortgage application process no longer sends me into anaphylactic shock.