As an expansion of my last post, which struck many as mad.
Here is the fantasy. Let's just say I did a cash-out refinance* for about, ohhhh, 1/4 of the value of my paid-off house. Let's say, I just put it in an insured CD. At that point, I'd be paying about 2-3% on my loan, the difference between the CD and the super-low mortgage rate.
Let's say I kept rolling over the CDs as they matured. I have a feeling that rates are going to go up, at least some time in the next 30 years.
What is the origin of this fantasy? My parents got a 5% mortgage in the early 60s. Their Principle and Interest payments were minimal. In the 70s--when I was in grad school and had NO MONEY--interest rates went through the roof. My parents and many others were able to invest in newly-available bank money market accounts that were paying 20%. Even Treasury Bonds--risk-free then as now--were paying in the teens.
Still thinking about it, though I'm probably toooooo lazy to go through the process.
Does my financial fantasy still seem mad?
*Cash Out Refinance is when your mortgage includes CASH. My friends in the biz were urging such a refi during the housing bubble--for college savings, for kitchen remodels, and the like. If you've kept up with the news, you will see many stories of families that ended up owing $500,000 on a house they originally paid $100,000 for. The other $400,000 (based on the house's appreciation) went to vacations, tuition, credit card debt, Viking stoves, major remodels, SUVs, and Coach bags.