BOSTON (1/27/15)--Homeowners have been pulling equity from their homes through refinancings at nearly double the pace seen last year at this time, according to data from Freddie Mac.
Slimmed-down mortgage rates and strengthening home prices have emboldened waves of home owners to refinance their mortgages with "cash-out refinancings" to pay for remodeling projects, college tuition payments or other investments (The Boston Globe Jan. 26).
According to the recent numbers, cash-outs rose to 28% of refinancing loans compared with 14% from a year earlier.
Robert Cashman, president/CEO of $1.3 billion-asset Metro CU, Chelsea, Mass., told The Globe that homeowners are merely taking advantage of the perfect conditions to pursue such deals.
Cashman said he's encouraging members with higher mortgage rates to at least explore refinancings.
"Now is the time if someone hasn't had the opportunity, if they haven't had the chance to refinance," Cashman said.
Cash-out refinancings allow homeowners to access equity by borrowing more than they owe on their mortgages.
Thanks to mortgage rates that have dropped to as low as 3.63% for 30-year fixed-rate mortgages, or 2.93% for 15-year mortgages, lenders saw a spike in these types of refinancings over the last month, which is traditionally one of the slowest points of the year.
Refinancings in general have surged in recent weeks on the heels of the low mortgage rates as well.
According to the Mortgage Bankers Association, applications for refinancings jumped 22% for the week ending Jan. 16 after a whopping 66% surge the week prior (The Boston Globe).