Engineered Hardwood Floors, Revisited

Made popular by home shows such as "This Old House" engineered hardwood floors seem to have had their day in the sun, being supplanted by vinyl and tile substitutes.

We decided to rip up the cheap carpet in the bedrooms and put down engineered hardwood flooring to match the rest of the house.   We bought enough paint to paint the whole inside of the house - walls, ceilings, and trim.   Home Depot had one of those "rebate" deals - we'll see how that works out.

I wrote before about engineered hardwood flooring and its shortcomings.   Since I wrote that, I have learned a number of things.  First of all, the flooring installed in our house was not the most expensive (big surprise) and that since that flooring was made, they have come up with new "waterproof" engineered hardwood flooring that stands up to water better than mine has.  That being said, one flooring guy we talked to said that putting engineered hardwood floors in bathrooms or kitchens is just nuts - go with tile instead.  And I think that is sound advice.  Maybe someday, we'll tile the kitchen floor (or have it tiled).

We decided to go with more engineered hardwood for the bedrooms, as it is fairly cheap to buy and easy to install (just glue it down on concrete) and it would match - pretty much - what we already have.  We found out, however, that the 5/16" x 3.5" strips we have are no longer in vogue and that the manufacturer is either out of business or has stopped making the product.  We found a very similar color wood in  5" wide strips, 3/8" thick, which should not be a problem as they are in different rooms with a transitioning threshold.

We bought 700 square feet of it, a whole pallet load, and brought it home in a borrowed cargo trailer.  It is all stacked up in the garage, ready to install.  It shouldn't be too hard to do.  The first piece will be the worst.

But what was most fascinating was that it seems engineered hardwood is, at least in our area, no longer so popular.  Most of our friends have gone to a "plank tile" which is styled to look like wood, but is waterproof and far more durable - and fairly cheap.  Others are using vinyl flooring not unsimilar to that I used in the Casita.   It sounds cheap, but it looks pretty convincing.

You can buy "hardwood" flooring for under a buck a square foot.   But it is little more than masonite with a photo of wood on it.  And you can spend all the way to $5 a square foot, if not more.  If you want it installed, as much as $10 a square foot.  Yes, wall-to-wall carpeting remains the cheapest floor covering out there, at least installed.

What was also interesting was the colors.  It seems darker colors are now in vogue - much as the dark color wood we used in our house in New York.  The light blond or natural oak, or even "red oak" seems to have fallen from favor and is harder to find.  Perhaps it shows dirt more?  Or maybe like the primer-grey wall paint color that has succeeded the oatmeal of the early 2000's, it is a fashion thing.

Mea Culpa, the wall paint Mark chose is called "sea salt" and is a greenish-blueish GRAY color.  So we are right up there with the fashionistas with their houses painted the color of an old junker car.   I guess you can't win.

But with new paint throughout, and new flooring in the bedrooms (as well as a new HVAC system, tomorrow) the house will be "refreshed" and ready for another 15 years of living.  Well, that is, once the kitchen appliances are replaced and the roof redone and the driveway re-paved.

It never ends.   I am looking forward to living in the trailer.

You Don't Bring Me Flowers, Anymore

People's tastes in products have changed over time, bankrupting industries that were once vibrant.

FTD declared bankruptcy, and the vulture capitalists are circling the corpse, hoping to snag a tasty morsel before it all rots.   Problem is, there isn't much left of this cadaver to nibble on.  People just don't buy flowers like they used to.

When I was a kid in the 1960's and 1970's, my Mother bought flowers all the time.  She would have a flower arrangement on the dining room table as a "centerpiece" and she would re-arrange the flowers daily, making a new arrangement from what was still viable and throwing away the rest.  When she ran out of flowers - a few days later - she would buy another bouquet at the grocery store or flower shop.

Mark tells me his Mother did the same thing back then.  They all did.   We all did.  People bought flowers, not for special occasions or weddings, but for everyday use.  A man had a carnation in his lapel.   Today, there are no lapels - no suits or dress shirts.   $100 t-shirts are the new officewear for the tech generation.

People don't buy flowers today like they used to.  This is not to say the industry is dead - indeed, sales have increased almost every year, at least as of 2017 and per capita spending has increased, at least since 2012 (the average American's spending has increased from 88 to 107 bucks in that period).   That data does include "potted plants" though, and may be misleading.  It is also from an industry trade association - consider the source.  The rate of increase does seem kind of flat, though.  And as 2009 data illustrates, the business is very susceptible to economic recession.

If we adjust for inflation, I suspect you would see spending for flowers themselves in the decline since the 1960's.   Fresh flowers for the home or office are just not as much a thing anymore.

Every town had its florist or maybe two. In addition, outside of town there be a greenhouse where flowers were raised. You still see these greenhouses by the interstate, with the glass broken or the plastic sheets hanging in shreds. All victims of Home Depot and Lowe's, who have taken over the potted plant business. They buy from wholesalers out-of-state who ship in the potted plants to the garden section. And as for florists - the few that are left - they get their flowers from overseas, mostly South America. No one raises hothouse flowers anymore.

But its not just flowers. Haberdasheries, Milliners, notions shops, shoe shine stands - the list goes on and on.  Things we used to spend money on - that were not necessities, but rather wants - that have gone entirely extinct as tastes and styles changed.  Things that, at the time, seemed to be permanent parts of the landscape.

I wrote before how back in the day, a young bride-to-be registered at the china shop, the crystal shop, and the silverware store.   She hoped to get twelve full place settings of crystal, china, and silver, so she could have proper dinner parties.   What bride would be without?

The other day, Mark was at the thrift shop, and an entire set (12 settings) of Spode wedding china was for sale for $20.  A far cry from the old days.   People just don't want this stuff anymore.   Why?  That is a good question.

We have become a more casual society.  What we wear as clothing today is what our ancestors (recent ancestors) would consider underwear in their day.  Mark's grandfather - as well as my own - got up every morning, showered, shaved, and put on a suit and tie, even in retirement.  Even when he wasn't planning on leaving the house.  It is just what one did.   I bought an old Popular Mechanics book from the 1930's on home maintenance that advised that when you paint your house, you "wear your old suit" as paint may spill on it.  The accompanying illustration showed a man in a full suit, with tie, wearing a fedora, painting his house.

How times have changed.  Perhaps it was colder back then - or people liked to sweat. Most folks did live in more Northern climes until the recent era, so perhaps wearing a full suit of clothes made sense, other than in the heat of the summer (where you would trade your wool suit for a linen or seersucker suit, and your heavy fedora for a straw boater).

Maybe it is also our economy, which has put so much more emphasis on saving money and "do it yourself" that people don't feel they can afford to have flowers every week, when they have a cable bill and cell phone bill.   Or maybe in the days before cable and cell phones, we had "excess income" to splurge on such things as fresh flowers, more often.

Or maybe it is a result of women's liberation. Fewer women are homemakers and have less time for home decoration and flower arranging.  Fewer women go to "finishing schools" where such skills are taught.

Or maybe it is a combination of all of these things - tastes change because conditions change, including economic conditions, social conditions, and whatnot.   60 years ago, having fresh flowers on the table and polished silver meant you were sophisticated and had taste, style, class (and money).  Today, your worth is measured by the length of your SUV and the size of your flat-screen television (and whether or not an Apple logo peeks out through a hole in your cell phone case). Yes, we have changed.

So what's the point of all of this?  I dunno, other than I think investing in the remnants of FTD is kind of dumb.   Most folks only send flowers these days at funerals and if someone is sick.   And sending flowers over the Internet (or by telephone) has always been problematic, as you have no way of knowing whether the recipient got a beautiful bouquet of flowers, or a bunch of dead roses the florist wanted to unload.   And of course, the recipient would not want to hurt your feelings by telling you the latter.   It was a pretty good racket, while it lasted.

I think also the demise of FTD illustrates how tastes and styles change over time, and what was once a vibrant business can decline into nothingness overnight. Ask your local bootblack or shoe-shine boy about this.  I recall many trying to adapt to our new era of wearing athletic sneakers everywhere - they tried to offer sneaker cleaning services, but there were few takers. Other than a few prominent locations in major cities, most chose instead to close down.   No one judges you by how shiny your Florsheims are, anymore.

The question remains:  What do we think is indispensable today that will be old hat tomorrow?  If you can predict this, you could make a small fortune - or at least avoid losing one.

Several things come to mind, of course.   Many prognosticators have predicted that in 50 years, few will bother owning a personal car, as everyone will merely summon a self-driving Uber with their smartphone (implanted in their skull by then, right?).   And that self-driving car will burn electricity, not gasoline - or so the narrative goes.  We've already seen the "neighborhood garage" with the "mechanic on duty" turn into a convenience store - the victim of increasingly complex but more reliable automobiles. The car business will change because it already has, considerably.

People argue that cable television will be obsolete - replaced by streaming services, so that people will watch what they want to watch, when they want to watch it, rather than have to "see what's on" or make an appointment to watch a program at a given time, or try to program a TiVo device to record it.   And maybe that will happen - or maybe not.  I think overall, on-demand streaming will replace the broad-casting model.  It just remains to be seen how the cable companies will profit from it.

Whatever the future brings, it will bring change, probably in ways we don't expect.   One thing is for sure, we probably won't go back - to the era of hoop skirts and bow ties, of petticoats for women and sock garters for men.   And I doubt wedding china will make a comeback anytime soon.  And fresh flowers?   Probably not either.  Not that they will go away entirely, they just won't be as much of a "thing" as they once were.  Yes, people still wear bow ties, particularly hipsters.  That doesn't mean ties are making a comeback.

But what else that we think of as essential today will go out of style in ten or twenty years?   Will people still be getting tattoos and piercings?  Or will the kids of 20 years from now rebel against their parents, and revert to au natural skin?

What about college?   Will people still sign up for $100,000 in student loans to spend four years of advance naval-gazing?  Or will it re-invent itself in response to competition?  We'll see.

I guess the point is, nothing is certain.  What we think of as bedrock features of our economic and social landscape are really castles built of sand.

Radio Flyer

Why would you name your wagon after a home appliance?  It turns out the answer is pretty complex.

Today we hear a lot about "cyber" this or "e-" that.  If you want to sell a product, predicate it with an "e-" or call it a cyber-something or maybe an e-cyber something and it will be sure to sell.  The plebes love all this high tech stuff, and anything sounding tech-y and trendy will surely please them.

And this has always been the case.

Back in the 1920's and early 1930's, radio was a big thing.  The idea of sending "wireless" messages astounded people, almost as much as the heavier-than-air flying machine.  Was their no limit to man's imagination and capabilities?   David Sarnoff, a Russian immigrant, bought up a lot of the radio Patents, and founded RCA - Radio Corporation of America - and created something called "Broad-Casting".   Until then, radio was a point-to-point thing, like the Internet or Ham radio.   You called up someone and talked to them, or did a dit-dot-dash in Morse code.   By the way, that Morse fellow was quite something, not only did he invent Morse code, he was a talented painter. 

Yes, even back then, we had our Elon Musks, and Steve Jobs.  The names were different was all - Edison, Ford, Wright, Westinghouse, and so forth.   Americans have always worshiped their tech heroes.

But getting back to "Radio" - the name became a handle, much as "Cyber" is today, for anything trendy and high-tech.   So you have a wagon called "Radio Flyer" which doesn't mean it has a radio in it, but that it is new and modern.  Or the movie studio called "RKO Radio Pictures" used "Radio" in its name twice (RKO standing for "Radio-Keith-Orpheum" after it was acquired by RCA).  The second "Radio" in "RKO Radio Pictures" is thus redundant.   I suspect it was thrown in there to be "modern" and all.

And modern we were, what with the Bauhaus designed buildings and Raymond Loewy streamlined locomotives.  The future was so bright, we would have to wear shades.  What a beautiful world it will be.

Modernism and the worship of technology is nothing new.

So what does this have to do with the price of tea in China (with tariffs applied)?   Not much, other than the patterns we see today in our society and in our markets are the same exact patterns we saw back in the 1920's when "radio" was the new high-tech, or maybe a few decades previous when steam power seemed like the end-all to technology.   People travelling at 20 miles and hour!  What will they think of next!

And with each iteration, there are winners and losers - more losers than winners, of course.   For every tech success story, whether it was in railroads, telegraph, steel, coal, oil, radio, telephone, automobiles, computers, internet, cell phones, smart phones, or whatever, there are always a few who come out on top and a host who go by the wayside.  Have you driven a Locomobile lately?

I think sometimes our fascination with technology blinds us to the realities of the business world.   We go all ga-ga over technology companies, even as they are losing money or as it becomes clear that a bubble is forming and that a shakeout is long overdue.

We tend to think of ourselves as modern and sophisticated, and look back at the dusty "technology" of an early age and shudder in the same way we do when looking at antique medical devices or abandoned mental asylums.   People actually thought that this stuff was technology?

I suspect folks in the future - and the pretty near future - will look back at our era and shudder in horror as to how naive we were.   In fact, many are already doing so.  Myself included.

The $500,000 Machine

Suppose you owned a machine that was worth a half-million dollars.  How would you take care of it?

Suppose you owned an expensive piece of machinery.  It could be a fancy car or a yacht or maybe one of those bus motorhomes.  Or maybe it is a piece of machinery like my cabinet-maker friend has, that can cut through ten sheets of wood at a time, using laser precision, all computer controlled down to the thousands of an inch.  Stuff like that represents a huge investment, and you'd take care of such equipment, because you spent a lot of money on it - and you want to maintain its value.

Well, maybe you already own such a machine - maybe one worth $250,000 or maybe a million dollars.   What am I talking about? 

Your house.

Yes, as I noted before, a home is not "the American dream" but a machine for living in.  And it is a complex machine, having a number of disparate parts and mechanisms, all of which are in a constant state of wearing out, sometimes failing in a catastrophic manner.  Pipes can break and flood your house.   Wiring can short and burn the place to the ground.   Yes, insurance helps, but make sure you have the right kind - you may not think you need flood insurance in the desert, but they get floods there, and if your house is flooded by a plumbing leak, your homeowner's may not cover it.

Also, insurance doesn't cover slow-moving hazards.   You find out you have termites and the garage has to be rebuilt - that isn't covered by many policies.   Keeping termites at bay is deemed maintenance, not a natural disaster.   Yea, we spent a pile on termite treatment - and annual updates as well.   But not having it - in the South - can be disastrous.  Similarly, your insurance company may send out an inspector, and if you have a tree hanging over your house, ready to fall, they may cancel your policy or at the very least insist you take the tree down first.   So you can't just forget about your obligations to this very expensive machine and let it fall down around you.  You have to keep it up.

Of course, the price spread between a "well- maintained" house and a "maintained" house, and a "run down" house in your neighborhood may be only 20-30% or so.   For example, houses in our neighborhood sell for about $450,000 or so.   A real run-down example may sell in the 300's, or in one recent special case, $250,000.   A stellar home might top a half-million, but it is very rare.   But there is a hundred grand spread between houses that are "serviceable" and those that are in top shape.  And maybe another hundred between "serviceable" and "ready to be gutted".

There is also the aspect of selling.  Houses in good shape sell quickly - often in a week or less. Houses needing work or updating can stay on the market for months, even years, as one low-ball offer after another is rejected.  It is only then that the owner decides to plow money into a house, installing new appliances, carpet, and paint - all things they themselves could not enjoy while living there - just to sell it.   The new owner rips all that out to install new things to their own tastes.  Yes, I have seen it happen - brand-new appliances with the EPA stickers still on them, sitting at the curb.  A good buy for wily people such as myself.

I noted before that in the appliance business, the design life (the lifetime that Engineers design for) is about 15 years.  With cars, about the same.  By the way, every product ever made, has a design life.   As in anything else (life of people, for example) there is a bell-curve (no relation) distribution.  Some things fail early on, while others last seemingly forever.  But the vast majority fail right smack dab in the middle of this curve, and for appliances and cars and whatnot, that is about 15 years.    So, plan on these replacements and repairs so you are not taken by surprise.   It kills me when I read some "oh woe is me!" story in the press about a single Mom in credit card debt because of an "unexpected appliance repair" or car repair or whatnot, when in fact, they should have expected such things to occur, particularly since the appliance in question was 20 years old, and the car of similar vintage.

What is worse is that often the people profiled in the story try to "fix" end-of-life appliances, and end up throwing more money at a used washing machine or car than it is worth.   One service call from an appliance technician is equal to nearly 1/4 or 1/2 the cost of replacing an appliance.   Even with Trump's washing machine tariffs, you can still buy a washer for under $500 (the same washer being only $299 a few years ago!).    Most service techs charge $75 to $100 just to drive to your house.  Parts and labor are extra.

Back in the day, I used to buy used GE (or associated brand) washers and dryers for $200 the pair (or less) and run them for a few years.  Once they started leaking or malfunctioning, off to the curb they went, and I looked in the Pennysaver (the Craigslist of that era) for a new pair.  In the metropolitan DC area, there was always someone almost throwing away good appliances on a daily basis.   Where we live now, in rural Georgia, people don't get rid of appliances until they are utterly wrung out.

But the point is, even if you bottom-feed for used appliances, spending money repairing them is often a foolish waste of money, unless you are handy and can fix such things yourself.   Most people can't.  And if you have to hire someone to do the repairs, often the cost of repair exceeds the cost of the appliance.

Our air conditioner is leaking.   Now, I've been able to nurse air conditioners along for years, in my previous life.   But even then, eventually they need to be replaced.   You can only patch and bandage for so long.  I repaired the microwave, and it cost me nothing, other than my time.  But experience tells me that this repair will last maybe two or three years, tops, before the whole thing needs to be replaced.   Everything has an end game.  It would not have been worthwhile spending $100 on a service call and another $100 for a new handle and faceplate - on a microwave worth $500 at most (and some sell for as little as $99).

And that is the problem right there.  Towards the end of an appliance's life (and that includes cars) repairs are needed.  At first, it seems like a no-brainer to spend a few hundred or a few thousand on repairs.   After all, that appliance or car cost a lot, new, right?   But the resale value on that item might be close to nothing.    Is it worth spending $1200 or more putting new tires on a car worth $4500 on a good day?   Pretty soon, even minor repairs exceed resale value, and that's about when it is time to cash it in.

To fix the leak in the air conditioner, I would have to buy a new coil.  A new coil, even on eBay, would run about $1200.  With labor, which involves disassembling a major portion of the air handler, evacuating the system, removing the old coil, installing the new one, pumping down the system, charging it and leak-checking it, it would easily cost over $2000 - possibly more.

A whole new A/C system, including air handler, A-coil, resistive heat coil, compressor and condenser and new refrigerant lines, installed, can be had for $5600 or less.   Which is a better bargain?  To some, it seems that the $2000 "patch" is a cheaper.  But since the system is about 15 years old, it is only a matter of time before something else breaks - such as the condenser coil, which has been sitting outside in the salt air, buried half the year in acidic pine needles.   What could possibly go wrong with that?

Sadly, people on the lower end of the financial spectrum take the patch approach, because they have no money in savings and their credit card is maxed out.  The A/C company offers to finance, of course, but folks whose credit is shot often don't qualify.   So they throw money away, patching an older system, and within a few months or years, have to pay more to patch yet again.   They end up spending more trying to fix end-of-life equipment than it would cost to simply replace.

Then there is the overall transaction cost to consider.   You own this $500,000 machine called a house.   Someday, you might like to sell it.   Actually, some day you will.  How does it appear to the prospective buyer when you say, "The A/C system was completely replaced five years ago with all-new equipment!" versus "Well, the system is 20 years old, but it has a new coil!"?   The former adds value to the home and makes it easier to sell.  The latter tells of band-aid approaches to maintenance and also speaks volumes about how the other systems in the house are faring.

In terms of cash-flow, the "patch" approach may seem less expensive, but in terms of overall cost, the overhaul is a better deal.  Patching together old appliances and systems adds nothing to the value of the home - and arguably decreases its value.   Replacing the HVAC system doesn't add much to the value of the home - maybe 50 cents on the dollar.   But on the other hand, that 50 cents represents the approximate spread between the patch price and the replace price.  In other words, in terms of overall cost, replacing the system ends up being about the same price as patching, with the bonus being improved reliability.

And by the way, as a prospective buyer, you should look at these things as well, which is why a home inspection is a good idea for novice buyers.   A house may look stunning to you, but it may turn out to need a lot of new stuff in a few short years.   Old appliances, old HVAC, old plumbing, old electric, old roof, and so on and so forth, spell trouble.   Our old Pacific-Electric panel was deemed a fire hazard, even though it "worked" fine.   We were fortunate in that the insurance company never inspected the house and demanded its replacement (as has happened to some neighbors of ours).   If we had to sell the house today (or a decade from now) a home inspection would spike that panel.  So, it made sense to replace it, even though it was "working" - why wait until the fire trucks come or your homeowner's insurance is cancelled to act?

When you see cracks in the driveway (our next project) or sidewalk, you have ask yourself, what else did the homeowner neglect?   It is like looking at a used car and seeing coffee stains on the upholstery and an ashtray overflowing with cigarette butts.  You don't have to even ask to know what the oil change history is like.   A house that looks poorly maintained probably is.

But again, it is this $500,000 machine - a machine so expensive that you should keep it polished and waxed and in good shape at all times.   You never want to be in a situation where maybe you have to sell, and the house has a litany of repairs that are needed - repairs that you put off.  when that happens, you are over a barrel, with a house that is hard to sell, that won't command a very high price in the marketplace as a result.

A reader takes me to task over this, claiming they spent $3000 repairing an old air conditioner, and it worked for years after that.   And again, due to the bell-curve distribution of failure rates, this is possible.  Not probable, but possible.   You can gamble that such a repair will be all that is needed to keep some piece of equipment running - and win.  And in the old days, when A/C units had copper coils - with copper fins, no less - and air handler motors had oil cups so they could be lubricated (as opposed to "sealed for life" bearings we have today) such equipment could be nursed along for quite a long time.   Yes, they don't make them like they used to - in some regards.

But of course, adjusting for inflation, they were a lot more expensive back then.  And today, appliances are designed for increased efficiency and lowest possible installed cost.   Copper coils and copper fins have given way to aluminum coils with "spiny fins" that look like Christmas tinsel.  Cheap to make and actually more efficient, due to the increased surface area.  But more inclined to corrode, particularly in salt-water environments, and nearly impossible to clean, except with foaming cleansing agents (a pressure-washer can blow the fins clean off!).  So the idea you can "patch" together a modern appliance like you can with one from the 1960's or 1970's is flawed.   Old refrigerators from the 1950's are still running, today.   Modern appliances are not made to be repaired much, as the cost of repairs is so high (because Americans all demand high wages) and the cost of new appliances (made in Mexico, no doubt) is low.

Of course, this stupid tariff war could change all that.    I am not sure it will be "progress" to pay two or three times the amount for appliances.   All I can say is, I am glad I snagged a new washer and dryer before the tariffs went into effect, and glad I snagged a new A/C unit before the Mexican tariffs went into effect as well.   Because if we go down this road, the $5600 A/C unit will be $10,000 before long.....

UPDATE:  About two hours after I wrote this, the air conditioner stopped working entirely.  I jumper the contactor and I was able to force it to run, but I think it is running out of charge as the circuit board on the condenser unit is flashing a green light and I believe the low pressure sensor has tripped. In other words, it's running out of refrigerant. I'm hoping you'll come tomorrow or Tuesday and replace the whole system.

The Pros and Cons of Refinancing

Most people refinance their home at least once in their life. Is this a good or bad thing? It all depends on the facts and circumstances.

I came of age in an era of very high inflation and high interest rates and high unemployment. Unemployment was running at least 10% in the late 70s and early 80s as was inflation. Mortgage rates were as high as 14% in that era. Some folks today like to claim that they have it worse than previous generations, in an era of ultra low unemployment, low inflation, and absurdly low interest rates - as well as a surging stock market.

If only we had a working time machine to send people back to 1979.   You know, the good old days when cars barely made a hundred horsepower and sounded like a bucket of bolts when you stepped on the throttle and gasoline was only available on even and odd days depending on your license plate number. But I digress.

Prior to that time, refinancing your mortgage was almost an unheard-of thing. You got a 30 year mortgage on your house and you made the payments on it until you paid it off, at which point you were very close to retirement age. Then you went off into retirement land with your house paid for, or you sold the house and moved to Florida using the proceeds to buy your next home.

But as interest rates started to drop in the 1980s, refinancing became more popular.  Banks were in search of lending business, and people with 13 or 14% mortgages were eager to find lower rates and lower monthly payments.

But during the real estate boom in the late 1980s and again in the 2000s, we saw people refinancing for different reasons. Interest rates hadn't really changed that much, but people were realizing their houses had appreciated substantially in value - at least on paper - and wanted to cash out on some of this phantom equity to pay off other debts or to buy things like luxury cars or do home improvement projects.

Thus, the cash-out refi was born, along with the home equity line of credit or HELOC.

Should you refinance your house? That is a piece of advice I would hesitate to give anyone because it is very fact-specific and dependent upon your circumstances.  In general, though, I would advise to borrow as little money as possible, as you have to pay back borrowed money.

What are the advantages of refinancing? They are kind of obvious:

1.  Your monthly payment may be lower.  If you are merely refinancing at a lower rate, and not taking cash out (or taking much cash) your monthly payment may be lower and you'll pay much less interest over the life of the loan - presuming you are locking into a lower fixed-rate loan and not a variable-rate note.  With a lower monthly payment, your finances may be a little easier and you can put more money away into savings.   Sadly, most people don't actually do this, but rather take cash-out so their monthly payment is the same, if not higher.

2.  You can take cash out.   I am not sure this is an "advantage" any more than going to the payday loan store and having that fan of $20 bills (like they show on the billboards) is an advantage.  All loans have to be paid back, with interest.  So yes, you end up with a pile of money, but often easy money gets spent easily, and then you are stuck paying it back.   Your net worth is now lower than it was before.

3.  You can consolidate debt.   If you have gotten into credit card debt problems (yes, I did it, more than once) you can get a "breather" and refinance your debts with a cash-out refi.  The problem is, of course, is that you are taking short-term debts for things like a meal you pooped out last week, and are financing them over 30 years.   It is possible that this can be a way to recover one's finances, but the problem is, most people (myself included) after doing a re-fi, consider themselves financial geniuses and go out and rack up more credit card debt.  Dumb!

4.  You can avoid Mortgage Insurance:   In some re-fis, if the appraised value of the property has gone up enough, the ratio of debt-to-equity has dropped to the point where mortgage insurance (which is usually required for first-time buyers) is no longer needed.  This can drop your monthly payment by a hundred bucks or so.   Of course, it is often possible to contact your existing lender and ask them to discontinue mortgage insurance, if you can show them (with the appraisal or tax assessment) that the value of the home has increased to the point where you no longer need the insurance.

5.  Taking non-deductible debt and making it deductible:   One argument made by mortgage brokers (who have no dog in this fight, right?) is that if you do a cash-out refi, and pay off old debts, the new debt is tax-deductible - well, the interest is, anyway.   There are some problems with this argument.  To begin with, technically you can only deduct interest for a purchase money mortgage.   Thus, if you buy a house for $200,000 and finance it for $200,000, you can deduct interest on the whole two hundred grand.  But if you re-fi for $250,000, you can only deduct for the interest on the first two hundred.

Calculating this is, of course, a nightmare, and since most homeowners want to take the deduction, they simply deduct all the interest.  And the IRS, having very limited resources, doesn't audit these sorts of things very often - or have any way of knowing you are deducting interest on a loan that exceeds the purchase amount.   But the law is clear on this - you cannot simply deduct interest an any loan secured by your home, only the PMM (Purchase Money Mortgage) or amount equal to the purchase price.

And of course, with Trump's new tax law, things are even more complicated.   For many people in the lower brackets, itemizing deductions makes no sense anymore.  And for people in the very high brackets, there is a cap on how much interest and property taxes can be deducted.   For interest, older loans are grandfathered in, so refinancing may limit your deduction abilities.  But we're talking about a loan value cap of $750,000, so if you are in that bracket, good for you.

You can't deduct your way to wealth, as I have noted before.   If you qualify for a tax deduction or tax credit, take it.  But using the IRS as an investment guide is never a good idea.   Maybe you get a tax credit for buying an electric car.  But that doesn't mean buying one makes sense for you, or that buying 100 of them will generate a profit for you.   Similarly, taking on more debt for tax deductions makes no sense.  It may make such debt seem more palatable, but less debt is even a better deal.

6.  It's better than a second mortgage or a HELOC:  This falls into one of those arguments that sticking a knitting needle in your eye is better than stabbing it into your heart.  If you are trying to take "cash out" of your home (i.e., borrowing more money and using your home as collateral) it is probably more efficient and you'll get a lower rate with a cash-our refi than you would with a second note or a HELOC - Home Equity Line of Credit.   Since second notes are second-in-line to get paid back in the event of foreclosure, the interest rates are usually higher.   That being said, less debt is better than more debt - always.

7.  You can shorten your loan term:   Some folks use a re-fi as an opportunity to switch to a shorter-term loan.   a 20- or 15-year loan will likely have a lower interest rate than a 30-year-fixed.   If the interest rates have dropped in recent years, you could re-fi and have not only a lower monthly payment, but also a shorter loan term!   You could end up owning your home, free and clear, in five or ten years less than before.  Sadly, few people do this, but rather go for a new 30-year loan.

So what are the disadvantages of refinancing?  Well, I've hinted at them above, and put these hints in the body of that, lest someone clip out only the first part and use it to cheerlead for refinancing.  The pitfalls are many, and in 2009, we saw firsthand how refinancing can be very, very dangerous.  Here are some of the pitfalls:

1.  Your home value may decline:  As we saw in 1989 and again, 20 years later in 2009, home values can peak and bubbles can burst.  It is possible to refinance your house based on an inflated appraisal value in the middle of a bubble, and then, five or ten years later, discover your home is worth less than the balance on the loan.   As a result, you can't sell the house for what you owe on it, and if you lose your job (say, in a recession) you end up in foreclosure.

We saw a lot of rending of garments and tearing of hair in 2009 as people whined about how unfair it was they were "losing their home" due to foreclosure.   But if you read the rest of the story, many of these folks claiming life was "unfair" had actually taken cash-out of their houses to buy luxury cars, go on vacations, pay off credit card debt, or invest in other properties.  I myself did the latter (well, maybe all three), but was fortunate enough to be sitting down when the music stopped.  I saw the market go berserk and sold out in time.

Others were less fortunate in their timing.   If you are going to cash-out in a re-fi, don't get too greedy and take too much cash out - and mortgage brokers will encourage this, even if you don't "need" the money.

Some folks take cash-out to remodel their home.  This is fine and all, but bear in mind that even the best remodeling jobs return pennies on the dollar - fifty cents at best.  So if you take out thirty grand to do a kitchen makeover, at best it might increase the value of your home by fifteen grand.   No matter how you slice it, you come out behind and further in debt.

2.  You are resetting the debt clock:  As I noted above, most people when refinancing, go with a new 30-year note.  Many have intentions of going to 15 or 20 years, but the mortgage broker will helpfully suggest that a 30-year note "is just like a 15-year note, if you make an extra payment once a year!"   But of course, being human beings, we spend that extra payment money on beer, instead.

By resetting the debt clock there are a number of effects - you end up paying more interest over time, and you end up with the possibility of perpetual debt.

3.  You are paying more interest:  The first few years of any mortgage are basically all interest payments.  You pay $1000 to the mortgage company and are chagrined to see $950 of it is interest and only $50 is principal.  If you refinance every five years, let's say, for 30 years, you'll end up paying almost every penny in interest.  Meanwhile, your stupid neighbor, who isn't as clever as you are to become a "serial refinancer" just ends up owning his dumb old house, free and clear.  What a dummy he is!

4.  Perpetual Debt:  As a result, you end up in perpetual debt.   Many people rationalize this, just as they rationalize a drug habit.  "I'll always have a mortgage!" one co-worker told me.  "I'll have to work until I'm 70!" another says.  "I'm a serial refinancer" one giggled to me.  In a way, it is like how many young people rationalize student loan debt - as if living large in college was inevitable, and student loans were a "mortgage on your career."

This makes me very sad, because people do have choices.  And the folks making these rationalizations often have designer clothes and the latest $1000 iPhone.   They are signing up for more and more debt, in order to have trinkets.  Sort of like how we stole Manhattan from the Indians for $24 worth of shiny baubles.

Problem is, debt eventually has to be paid off, and a lot of people are not thinking about this.  They enter their retirement years hopelessly in debt, and have no way of paying it off, short of bankruptcy (which does not discharge student loan debt).  Some way to retire!

5.  Fees, Fees, Fees:  That friendly mortgage broker isn't your friend, he is a merchant, and he makes money by originating loans.  Of course he is friendly to you!  He's making money on your loan.  Be late with one payment and see how friendly they are then...

Fees can be tacked on everywhere - loan origination fees, mortgage points, mortgage insurance, document prep fees, fee fees, whatever.   It pays to scrutinize these and talk them down - often lenders will pad on fees and only reduce them if you threaten to take your business elsewhere.  It pays also, to shop around.  Again, never fall into the trap of thinking that borrowing money is a privilege!  You are paying these people, not vice-versa.  They money they "give" you is your own, and you have to pay them back for it.

As with buying a house, the fees can negate savings.  In the Real Estate sales business, it is said that unless you plan on staying in the home for five years, it isn't worth buying, as the transaction costs will eat up any capital gains, in a normal market.  Yet, we knew people in Washington, DC, who would move every three years or so, to get a "better house" as they got a raise in pay - they were treading water and slowly drowning.

The rule of thumb for refinance is that if the money you save pays back the transaction costs within a year or so, it is probably worthwhile to refinance.   Of course, as outlined above, most people these days aren't refinancing to save money, they are doing it to spend money they don't have and as as result, their monthly payment is more, not less (or at best, break even).   So the balance of the loan increases not only by the cash-out, but by the fees - often in the thousands of dollars - added to the loan balance by the lender.

Blinded by monthly payment, most people go along with this.  But if someone said to them, "Hey, mind if I take $5000 out of your checking account?" they would balk.

6.  Your Net Worth:  As I intimated above, most people look at these transactions in terms of monthly payments.  I make $X a month and spend $Y a month, and so long as X>Y, I am doing OK - right?   Well, not always.  You see there is your overall net worth to consider - and most people have no idea what their net worth is (and this is sad, as today there are calculators, such as the one Merrill Edge provides, which can show your net worth on a daily basis).

So, for example, say you have $50,000 in your 401(k), and have $20,000 in car payments and another $10,000 in student loan debt.  Your house is worth $250,000 and has a $150,000 mortgage on it.   Your "net worth" - if we include the value of the house (some financial experts don't) is the sum of your assets ($250,000 + $50,000 = $300,000) minus the sum of your debts ($150,000 + $20,000 + $10,000 = $180,000).   Hence your net worth is $120,000.

Now, let's say you refinance your house and take out $50,000 in cash-out.  Your mortgage is now $200,000.   You pay off your car loan and student loans so the mortgage becomes your only debt.  You use the remaining $20,000 for home improvement projects, which increase the value of your home by $10,000.

Your net worth is now ($260,000 + $50,000) - $200,000 = $110,000.    As you can see, even using this money to pay off other debts results in a net drop to your net worth of $10,000.  Of course, I am not factoring in the fees and loan costs, which might ding your net worth by another two to five grand, depending on the lender or broker.  And I might also note that that car loan, which had only two more years to go on it, is now amortized over 30 years.   So in the long haul, you are adding a pile of interest to your life, as well as decreasing your net worth.

It pays to look at things in terms of overall transaction costs instead of monthly payment mentality.  When you are debt-free and living off savings, as I am, you are forced to do so.  When you have no savings, lots of debt, and a steady paycheck from a "job" the monthly payment mentality is awfully attractive.

My story:  We financed houses and investment properties and refinanced them over time - sometimes again and again.  We survived the meltdown of 1989 and 2009 because of good timing and luck.  In 1989, we had bought a house (not a condo, as many of our friends did) and held on during the next few years, as home prices leveled off and in fact, dropped slightly.  Our friends with condos lost their shirts.  Our house was on a 3-2-1 buydown with an eventual interest rate of 11-5/8% (!!!) and eventually, we were able to refinance it and eliminate the mortgage insurance as well.  This resulted in a lower monthly payment.

It would have been fine if we had left it at that - resetting the 30-year mortgage clock after five years or so, but we refinanced again, to pay off personal debts (car loans, credit cards, swimming pool) and before long, our $189,000 house was mortgaged for over $300,000.   Pretty dumb, eh?   Fortunately, property values continued to climb in the DC market and we were never upside-down on the home.  And since it was on two deeded lots, a developer was willing to pay us nearly $700,000 for the property just prior to the meltdown, in 2005.

Never confuse getting lucky with being brilliant.  We took that cash and went out and bought another house in New York - and took out another mortgage to fix it up.   That was pretty dumb, in retrospect.  I think we even refinanced that mortgage once, as well - or was it the one here on Jekyll?  I forget.

With the investment properties, we had variable-rate loans.  I would avoid variable-rate loans like the plague, particularly today in this era of low-interest.  Rates have only one way to go - up.  And when they go up, odds are, you can't "refinance to lock in a lower rate" as the mortgage broker (remember him?  The one with no dog?) likes to say.  He lies, a lot.  To himself, too.

But for commercial properties, "callable notes" with variable rates are usually the only option.  I refinanced these at lower rates, using a bank I was a founding shareholder of.   I took cash-out, not to pay off credit card debt or buy a car, but to buy another property.   And we did this again and again and ended up with several properties, all of which generated a positive cash flow, paid the mortgage payments, paid the insurance and taxes, and were increasing in value.

During that time, interest rates dropped.  I was going to refinance my office building and I called the VP of the bank where I had the loan (the bank I had founder's shares in).   He said, "no need to re-fi, we'll just adjust the interest rate on the note!"   You see how it works, once you have money, it is a lot easier to make more of it.   The poor slob facing foreclosure doesn't get such consideration.   Life is unfair.

Then the real estate market went berserk.  When people offered us two or three times what we paid for properties, we sold.  And again, don't confuse being lucky with being brilliant.  OK, so we made one smart decision, but then made a dumb one - we put the money into a vacation home - a personal residence that didn't generate income as the investment properties did.    We did OK with it, enjoyed it for a decade and then sold it off and paid off the rest of our debts.

What would I have done differently?  I would have bought the vacation home, but bought a much cheaper one (one we did look at, which was more of a cottage than a house, but also could have been easily rented in the winter to students at the local women's college).   I would have borrowed less and spent less - we took "cash out" of our properties, which is to say, we borrowed money from Uncle Tomorrow to have fun today, using the excuse that we were working so hard, we deserved a treat now and then - using someone else's money, the us of tomorrow.

Home improvement projects were fun and all, but it all tasted the same to the bulldozer when they tore down our house.   I learned a valuable lesson there - it pays to maintain a home, but adding things to it - particularly things that can detract from value - is just throwing money away.  If you enjoy that sort of thing, fine.  Just realize how much it is costing.

But, as they say, you can't unbark the dog.  And someone reading this will say, "Well, that's all very well and fine, but my situation is different!"  And it very well may be, which is why I don't give advice.  Advice is easy to give, hard to take, and people often take advice, twist it around and then apply it poorly and then blame the advice-giver when it goes horribly wrong.

I guess to boil it down to a nutshell, it would be this - borrow the least amount of money you can.  Even a thousand here, or a thousand there adds up to "real" money (if you saw a thousand dollars on the street, you'd stoop down to pick it up for sure!).   Realize the money your are borrowing is your own money, and has to be paid back.   Don't fall for the monthly payment mentality to the point where you are blinding yourself to the overall costs and transaction costs.   And don't turn refinancing into a lifestyle choice - as many people do, refinancing again and again, in life.

Because all loans get paid off eventually.   And someday, you'd like to be debt-free - or wish you were.