October 15, 2019

A refinance can help bring the holidays home

How would you like to lower your current mortgage interest rate, skip a payment, and have a few extra bucks in your pockets for the holidays?

With a mortgage loan refinance from Bay Equity today, you can avoid some seasonal financial stress and spend more quality time with the family.

If you wish, you can even take out extra cash to pay for big-ticket gifts or holiday remodels, without resorting to high-interest credit cards!

The relatively low supply of houses for sale, combined with flourishing demand, continues to drive home prices upward.

Many homeowners have chosen to refinance their mortgages to take advantage of the falling interest rates in 2019, but mortgage analytics company Black Knight estimates there are still more than 5.9 million people who could potentially save an average of $271 per month by refinancing.

Besides potentially securing a lower interest rate, your hard-won home equity can also help you enhance your personal living situation. A “cash-out” refinance is a low-interest cash loan against the home’s equity.

Depending on financial needs, homeowners can generally get a loan for up to 80 percent of the home’s value.

After the original mortgage is paid off the rest of the cash is yours to spend as you wish, whether for gifts under the tree, unpaid bills, health care costs, a new business venture, college tuition or a new backyard pool.

The collective amount borrowers could pull out of their homes while still retaining 20% equity (tappable equity) hit an astonishing $6.3 trillion in the second quarter of 2019.

Roughly 45 million mortgage holders have this excess equity, and half of them have mortgage rates that would make a cash-out refinance not only possible, but attractive.

But despite the record housing wealth, today’s homeowners have been conservative. In 2006, 89% of refinances were cash-out, according to Freddie Mac. Today, with much lower mortgage rates, cash-out refinances are just 61% of the total pool.

Why the reluctance? It could boil down to the collective remembrance of the Housing Crash. In the years leading up to it, loose lending standards let pretty much anyone have cash, using their homes like ATMs, even if they couldn't pay the loan back.

When home prices plummeted, millions of borrowers fell underwater, causing an epic foreclosure crisis.

Today’s lending laws require a far more detailed analysis of a borrower’s ability to repay.

With the steadily rising value of American homes, a refinance is a sound investment in your future wealth.

Cash out and a better interest rate are just two refinance possibilities. There’s also the options of reducing to a shorter-term loan length than your current mortgage, or consolidating higher interest debt into one payment.

The VA also offers refinance loans, potentially reducing the interest rate, payment, and overall interest rate on a property on which a veteran has already used VA loan eligibility

Your Bay Equity loan officer is your go-to person for information on refinances and other home equity loan products. We’ll guide you on how you can potentially use your home equity to build your dreams into reality!