Why Refi?

Taking equity out of your house can be a good move--but not always

After living in their two-story, Mediterranean-style house in Orange County, Calif., for almost 18 years, Norm Bour, 51, and his wife Peggy, 57, are refinancing for the fourth time. Not only will they lower their house payments by $200, but the Bours will also tap into their equity to the tune of $135,000 to redo their wood floors, pay for Norm's Lexus (now that the lease is up) and pay off their time share in Maui. Their latest loan: a 30-year, $350,000 adjustable-rate mortgage (ARM) for a home valued at slightly less than $1 million.

Unlike most people in earlier generations,...

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