People who could have had a nice little equity nest egg instead cashed out every cent available. Many are left with nothing. The lucky serial cash-out refinancers are left underwater. The unlucky ones are foreclosed on. This brings us to today's example, a serial cash-out refinancer who borrowed on the house and lost. Lets take a look -
Here is the property -
Here is the property info -
(Sorry about the layout - had trouble trying to fix it after cut and paste)
Here are the financials -
- The property was purchased for $118,000 in February 1998.
- The original mortgage in 1998 is not available on the database.
- A HELOC was opened in August 2000 for $25,000 with Chase.
- In February 2003 a HELOC was opened for $73,594 with Wells Fargo.
- A second mortgage for $68,047 was taken in August 2003 with Wells Fargo.
- The condo was refinanced in October 2004 for $236,000 with an ARM from Decision One.
- In January 2006 the property was refinanced for $276,250 with Countrywide.
- The foreclosure process started in May 2007 with the filing of a Lis Pendens.
- The property is currently an REO for sale through a realtor for $257,900.
Now that the property went into foreclosure after the last Refi the property has cost the lender $33,824 after the standard realtor fees are factored in.
If the owner had handled the property different they could have netted approximately $126,000 for the property. Instead they chose to extract all of the equity - plus some extra at market peak - out of the property. Now they do not have the any accumulated equity nor do they have the property and good credit. Foreclosures have a lot of negative consequences - and those are just some. We now can look back on bubble logic and see how dangerous serial refinancing could be to ones wallet.