People are leveraging their greater equity to release cash from their home in amounts sufficient to consolidate debt or renovate the kitchen and bathrooms. With the cost of living climbing every day, it’s nice to know something beneficial to homeowners is also climbing: the amount of cash they can release from their home.
The average rate for a 15-year mortgage just climbed to 5.38% (fixed) according to Mortgage News Daily, shrinking the pool of potential refinancers whose current rate is significantly above market averages. The rule of thumb is that a rate 1% lower than your current rate opens the door for smart refinancing.
But equity is also climbing across America thanks to surging property values, making the cash-out option more attractive even while the usual selling feature of a refinance—a much lower payment—grows less likely. After an appraisal, many people learn they “suddenly” own more home than they expected.Get Free Quotes
The Wall Street Journal reports that total U.S. home equity increased almost 20% in the first quarter of 2022 to $27.8 trillion, a record high, according to the Federal Reserve.
Since the amount of cash people can get is directly related to their equity, people can now get enough cash to pay off exorbitant credit cards or make critical home repairs even after paying closing costs on the new mortgage.
Here at Lendgo we have tracked an increase in people exploring the cash-out option over a regular refinance. Growing equity makes the cash-out option attractive to more homeowners while, simultaneously, climbing interest rates have dampened enthusiasm for an ordinary refi.
Mortgage data analyst Black Knight reports that about 60% of the growing U.S. home equity in 2021 was withdrawn via cash-out refinances.
A rate just 1% lower than your current rate can save you hundreds of dollars a month and thousands of dollars over the life of the mortgage. Get fast personalized quotes before rates rise.
"With the cost of living climbing every day, it’s nice to know something beneficial to homeowners is also climbing: the amount of cash they can release from their home."
Volatility Requires Quick Action
If you want to refinance before rates climb again, the clock is ticking. Luckily, one of the most valuable tools in mortgage shopping gets results in three minutes. More and more homeowners are using our free loan shopping platform to see their best options and thinking of themselves as being in a race with inflation and the next 2022 rate hike.
When a refinance around 5% can empower you to vanquish credit cards charging you around 20%, you owe it to yourself to explore the option.Get Free Quotes Now