Is Cash-out refinancing bad for the economy?

2 Replies

No, in fact it is quite good for the economy.   The bank makes money, the title company makes money, an appraiser makes money. You get a chunk of cash and invest it back into the economy and many more people make money: contractors, realtors, inspectors. Money is created and it is spent and it grows the economy.

It can’t be worse right? If you pay all Those guys and then just park the money in the bank it’s exactly the same s it was except all those people made money and are going to pay taxes. If you actually spend it then a boat load more taxes are paid by the recipients and the sales tax and so on. 

Imagine the opposite. Next month nobody spends any money, they send all their income towards their outstanding mortgage, would that be bad or good for the economy?