Everybody Loves Your Money

I was driving by the gas station today and looked at the cheapest gas on the sign.  It was $3.29 a gallon.  What I find interesting is the last time gas was $3.29 a gallon, the whole nation was screaming bloody murder.  Now, rather than scream, everyone seems to be just sucking it up and paying the price.  It’s interesting how we slowly aclimate to the higher price.  I’m sure there is a term for this type of behavioral response but I have no idea what it is.

I’ll be interested to see what kind of profits the oil companies roll around in this quarter.  It seems somewhat amazing to me that we can take a limited resource like oil and have no regulation at all on it.  I’m not going to say whether I think that is right or wrong, but I wonder what would happen if energy was regulated?  Would we see the massive spikes in price?  Would we pay more for energy because of the lack of competition?  Frankly, competition doesn’t seem to be helping all that much at this point, although I’m just an amateur shmuck sitting in line at the gas station, so what do I know.  Would regulation really do anything, considering we are now a global economy?  What good would regulation do in one country?  Probably not a lot.  Maybe the better approach would be to enact legislation to force better energy efficiency.  What do you think?

What I do know is that all of this expensive energy, (natural gas for my house, fuel for my car, electricity for my house) is causing me to really think about my consumption.  I find myself much more conscious of my energy usage and plan to be much more responsible with the cars that I buy in the future.  I think that Honda and Toyota have seen the writing on the wall for a long time.  They have aggressively pursued high fuel efficiency and they are reaping the rewards of that now.  With all the energy consumption in nations like China and India, it only stands to reason that we would start seeing much more demand.  I wish that we as a nation had done a better job of predicting the increased global consumption sooner, but I certainly can’t blame anyone because I sure didn’t.  (Not that a lowly Information Technology worker should be trying to predict global energy consumption anyway).

Anyway, just a rambling post about energy in general.  I really wonder what the right answer is when it comes to our nation’s use of energy.  We certainly can’t enforce global rules for energy consumption and frankly we wouldn’t have much credibility if we tried considering how we all consume more than pretty much every other country out there.

Here I am, sitting pretty with a 5.75% fixed rate 30 year mortgage.  Sure, I could have gotten a little better rate when the mortgage rates were at their bottom, but I didn’t.  Overall, I’m not complaining about the rate I’ve got.  At least it’s a reasonable rate and it’s fixed.  I don’t have to worry about rate adjustments every 6 months, or payments that balloon out of control.  Needless to say, the whole thing just gives me a certain peace of mind.

I wish that I could send out a letter to all the sleazy mortgage loan companies out there to let them know that I’m very happy with my current loan and would not even consider taking a new loan with them.  At this point, they aren’t going to beat the rate that I have and even if they could, I really don’t want to stretch my loan out another 30 years.  The only time I’d even consider refinancing is if rates got low enough to get me a 15 year fixed loan for approximately the same payment that I have now.  That’s not going to happen.

At first I used to chuckle at the ridiculous mortgage loan letters that I would receive: “0% interest for 3 months, and then your interest rate will go up to 9.9% and adjust from there every 6 months”.  Yeah, I made that up, but I’m sure someone got a letter with those terms in it.  Now, when I receive these offers, it kind of makes me a little mad.  Millions of families are in crisis because of the ridiculous loans they either ignorantly signed up for, or were led to believe had better terms than they really did.  Tons of people are losing their homes in this mortgage meltdown but the letters haven’t let up yet.

I just received a letter in the mail.  The good news is that this sleazy mortgage company has done some analysis on my loan and they have discovered I qualify for a 1% loan.  It is great news indeed.  I can free up money for new cars, vacations, remodel my house or even use the extra money to pay off a bankruptcy.  It seriously says that if I take their loan, I would have more money to pay off a bankruptcy.  Oh, and by taking out a new loan I wouldn’t even have a payment for 30-60 days.  That’s more money, that I could use however I please.

Now the fine print: “The initial rate and APR are variable rates which may increase after closing, and are available on a 40 year first trust deed/mortgage loan to purchase or refinance of owner occupied, single family residence, condominiums, townhouses, and PUD’s only.  Rates and APR are set for five years only.  After the first five years, rate and fully amortized payment are based on a 12 month MTA index plus a margin 2.75.  Lifetime interest rate cap is 9.95%.  The initial payment is based on a fixed payment option for the first 60 months.  Payment referenced is a minimum payment option which may result in deferred interest.  80% loan to appraised value may be required.  Prepayment penalty will be required.”

HOLY CRAP.  No wonder people are getting in trouble in this country.  They get teased in with a 1% offer and don’t read or at least understand the fine print.  The person that signs up for this loan is taking out a 40 YEAR loan, may find their rate increases after closing, will most likely face up to a 9.95% interest rate over the life of the loan, and even the 1% isn’t true because the fine print says that they may just be deferring the interest, not avoiding it.  Notice that they want an 80% LTV ratio, which means that you can’t borrow more than 80% of the value of the house.  Yeah, smart thinking Mr. Dirty Mortgage Man.  You better cover your butt because even I’d probably end up defaulting on this loan and I make a good living and have good credit.  And did you see the part about prepayment penalties?  Sleazy, really sleazy.