Demand for cash-out mortgage refinancing increased 33% last year, reports Black Knight

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New data shows homeowners are rushing for cash mortgage refinances, allowing them to dip into record home values ​​in the form of cash. (iStock)

Homeowners Are Using Record Real Estate Values ​​To Profit From Cash Refinancing, Says Black Knight mortgage analysis firm.

Demand for cash mortgage refinancing has grown 33% in the past year, driven by a 32% increase in workable equity, according to the report. This is despite the fact that mortgage rates have risen slightly in recent months.

“This shift tends to occur in any rising rate environment, let alone one in which US mortgage holders have over $ 9 trillion in exploitable equity,” said Scott Happ. , president of Black Knight Secondary Marketing Technologies.

Happ added that although cash-out refinances declined slightly (-0.3%) for the month of October, “the overall trend towards an equity-centric refi market remains strong.”

Read on to learn more about how you can take advantage of historically high real estate values ​​through cash refinancing. You can compare free withdrawal refi offers on Credible without impacting your credit score and find the lowest possible rate for your financial situation.

AVERAGE CLOSING COSTS FOR A MORTGAGE OVER $ 6,000, A STUDY FOUND

High home equity triggering the cash-out refinancing boom

Cash refinancing allows homeowners to take out a larger mortgage in order to borrow money against the equity in their working home. The new mortgage will replace the existing mortgage, so the monthly payment may change.

Actionable equity is the amount homeowners can access while still maintaining at least 20% equity in their home. Overall exploitable equity has increased by $ 2.3 trillion since the third quarter of 2020, according to Black Knight. The average homeowner has nearly $ 178,000 in working equity, an increase of $ 53,000 over the past 18 months due to skyrocketing home values.

Homeowners have responded to the growth in home equity by blocking cash refinancing offers at a breakneck pace. Besides the 33% increase over the past year, demand for cash-out refinancing increased 41% between June and August alone, the data shows.

To tap into the equity in your home, start the process by checking out the refinance withdrawal rates on Credible. Then, estimate your new monthly mortgage payments using a home loan calculator.

HOME EQUITY LOAN VS. REAL ESTATE LINE OF CREDIT (HELOC): WHICH IS BEST?

When to cash in the refinancing

Cash-out refinancing helps you access a package amount of money from your home that you can use as you see fit. If you need the cash to pay for home renovations, pay off credit card debt, or fund a large expense, refinancing can help you meet those financial goals.

When considering whether to refinance your mortgage, ask yourself the following questions:

  • What is the value of your house? You can estimate the value of your home on sites like Realtor.com, but you will need an estimate to determine an exact number. While home values ​​are at record highs, be careful not to overborrow unnecessarily.
  • How much workable equity do you have? Most mortgage lenders will allow you to borrow up to 80% of the value of your home to avoid private mortgage insurance (PMI). To determine your home equity amount, subtract your mortgage balance from the value of your home.
  • What is your current mortgage rate? Ideally, you should only refinance your mortgage if you can afford a lower rate. Although mortgage rates have risen in recent months, they are still near historic lows.

SHOULD YOU TAKE A PERSONAL HOME RENOVATION LOAN?

If you have workable equity and may qualify for a lower mortgage interest rate, mortgage refinancing with withdrawal may be right for you. Visit Credible to compare loan refinancing rates between multiple mortgage lenders by filling out just one form.

REFINANCING FOR DEBT CONSOLIDATION: ADVANTAGES, DISADVANTAGES AND WHAT YOU NEED TO KNOW

With mortgage rates expected to rise, now is the time to refinance

Mortgage rates have been steadily rising since they hit record lows in January 2021, according to Freddie mac, and experts believe this trend will continue. the Mortgage Bankers Association (MBA) predicts that 30-year average mortgage rates will reach 4.0% in 2022 and 4.3% in 2023, up from 3.1% in 2021.

The rise in mortgage rates is due, in part, to forecasts by the Federal Reserve, which has kept interest rates low for the past two years to stimulate economic recovery during the coronavirus pandemic. However, the Fed plans to implement its first post-pandemic rate hike in 2022 – at which time mortgage rates will rise at a much faster rate.

If you’re considering a cash mortgage refinance, it’s important to act before the Fed raises interest rates. You can browse the current mortgage rates of the actual lenders in the table below and visit Credible to begin the refinancing process and see if you can qualify for a lower interest rate.

HOW DOES A CASH-OUT REFINANCING WORK?

Have a finance-related question, but you don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.


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