Countrywide's "Combo Loan" ad on tv is telling about

[Skidmore]

how much in debt the citizens of this nation are. Remember when refis were just for your mortgage? Well this one lets you know that you will be able to combine your 1st, 2nd, and 3rd mortgages, credit card debt, and car loans all in the same instrument. Nothing like betting your life away on bad credit, is there?

[Rosemary2205]

1. You need the equity to cover it all

it's just a marketing tool to people with alot of unsecured debt and lots of equity. Basically it's a refi with cash out. And yes, IMHO it is dangerous for people to do because clearly they need to get a handle on keeping spending within their income rather than running up the cards. The tendency to run up the card again will be there. Hopefully, some will see this as a 2nd chance to get their income and spending back in line.

BTW, not everyone in this situation is a spender. I am a perfect example. My husband and I together earn a middle middle class income. We put 10% of our income toward retirement and another 10% toward emergency savings. When our crisis hit we had more quite a bit in retirement savings and more than 2 years of normal living expenses put aside. A tornado blew our house away one night, left me paralyzed and injured my husband who recovered but missed 8 months of work. I was out for 4 years. Thank god our children were fine. The truth is, it only took us 18 months to go through every bit of savings we had amassed. Since our house was nearly paid off we decided to refi the minute husband had proof of income and take cash out. We did not end up in bankruptcy, thank god.

I tell you this because I want you to understand that while a fair majority people are simply immature and irresponsible with money, not everyone in this situation is. And some have been living within thier means but not particular savers and then meet a crisis. Considering we almost never have all the facts about someone else's situation, IMHO it's just best to not judge. Encourage saving is one thing when someone has the income to do so. But how many people have job losses, income reductions etc. Adjusting one's lifestyle to accomodate a lower income isn't as easy as it sounds. And really, how many Americans are already living a modest life with a low income and CAN'T save? Hit them with a week of the flu and no income here, a kid with a broken arm and no insurance there, a broken down car that needs fixed there -- sometimes it doesn't take long for the credit cards to run up.

[Jacobin]

2. Exactly correct

They are betting that if you hit a bump in the financial road, you'll find some way to keep paying for the rest of your life for that pile of bricks

[high density]

3. A cash-out refi could help somebody get back on track...

assuming that they cut up the credit cards after they're paid off with the proceeds of the new loan. Paying 6.5% interest is a lot better than 15-20%, but obviously it doesn't work if they just max out the credit cards again.