Third and finally, the traditional story misses the real function of private banks, which is to
solve an information problem in the purest Hayekian senses. That is, banks are or should be specialists in risk assessment and risk taking. They should know their client, understand the local market and have their pulse on the broad economy. Arguably, if properly structured, they can and should do this better
than other entities such as governments. In
other words, the proper role of banks should be underwriting — lend money, hold the
debt, and bear the risk. Which is a long - winded way of getting to the main point of this post.
One would think that refinancing would only
solve the problem with your home loan, but truth is that by taking advantage of cash out refinance loans you can request a higher loan amount
than the amount of your current mortgage's remaining
debt and use that extra money to cancel
other non-negotiable
debt.