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So You Want to Refinance: An Insiders Guide to Refinancing Adjustable Rate Mortgages and Home Loans

So You Want to Refinance: An Insiders Guide to Refinancing Adjustable Rate Mortgages and Home Loans

"A must-have for any home owner looking to refinance" -Terri Williams, Homeowner Are you paying more than you need to? In this book a mortgage lending insider reveals her answer to this question - and more - in her best selling So You Want to Refinance. If you are baffled by the dizzying array of mortgage companies, sales pitches, and loan products, this book is for you. The book walks you through each step of the loan process in easy-to-understand language to help you make an informed decis

List Price: $ 16.95 Price: $ 16.95

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Tags: Adjustable, Guide, Home, Insider's, Loans, Mortgages, Rate, Refinance, Refinancing, Want

Why Car Loan Refinancing Has Become More Popular?

Have you ever thought about refinancing your current car loan? In the past few years, automotive refinancing has become more and more popular – especially as the interest rates that independent used car dealers and even new car dealerships charge continue to go up. There is something you can do about it. You can decide to stop these higher payments now and opt for car refinance to bring your payments down. After reading this article, you may be interested in automobile refinancing for a new car that you have just purchased recently, or auto refinance for a used car.

 

There a few reasons why someone may want to refinance their auto loan. First, depending on your financial situation when you first applied for a car loan, you may have taken a “no credit” or “bad credit” Car Financing at a very high interest rate. If you have made on-time payments since, and possibly have other good credit marks from other companies (credit cards, mortgage, utilities, and others that report to the three major credit agencies – Equifax, Trans Union, and Experian), then regardless of your previous bad credit history, an auto refinancing loan can probably get you a much lower rate than you are paying now. In this way, diligent payments and hard work to clean up or create a good credit history to start with will pay off by giving you a much more affordable payment now.

 

Another reason why some people may be in the market for car loan refinancing may be that they had made a mistake when purchasing their vehicle to start with. Maybe a high-pressure salesman put them in a new car that is far too expensive for their current income. (This can happen easily and it is why it is a good reason to have the car in mind that you want to buy before you go to the dealer’s lot.) Or, because of poor credit, an auto loan with a very high interest rate was given. Often dealerships will take advantage of people in these circumstances and try to give them the highest interest rate possible, sometimes more than 25%! As people are pressured to make a decision on the spot, many times they take the bad loan to be able to drive away immediately, only to be sorry after they see how much the high payments will really impact their lifestyle.

 

If someone has good credit and they are looking for the lowest rate, Car Financing is a simple matter. There are many companies to choose from and most can offer you a much lower rate than you are paying now. However, you absolutely can also refinance a car with poor credit. Auto refinance with bankruptcy or repossession, while it can be a challenge, is possible and there are many companies out there to work with. Online car refinance lenders are typically able to help most people out of their bad credit car loans and into an auto refinance loan that more adequately matches their needs.

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Tags: Become, Loan, More, Popular, Refinancing

The Keys to Obtaining and Refinancing Your College Loan

How many of you are biting your nails trying to figure out what you should do to get your college paid for? You know you need a loan… but what kind? What are the differences? Would it be a good idea to refinance or consolidate any loans you already have? Is this the right time? How much do you really need? What do college loans cover? If you’re wondering about these things, please read on.

Before you run out and get a college loan, you first need to know how much of a loan you are going to need. Of course, the obvious part of the loan is your tuition and the cost of your courses. But there are many other things that you may need to have covered through your college loan. This can be your room and board, school supplies, lab supplies, books, etc. But this just pertains to your actual schooling. There are other things you need to take into consideration. This can be car insurance, gas, transportation, health insurance, food, etc. You need to add all of these factors up for each year. Then, multiply it by how many years you are to be in college. This will give you a rough estimate of how much money you will need.

Some college loans can be used for anything. The lender couldn’t care less as long as you pay it back. If you plan on getting a part time job, you can count on part of your paycheck being used towards things that your college loan does not cover. However remember you’ll need to keep part of your paycheck to pay your monthly college loan payment!

Now we shall go over the several types of college loans out there. A little later, I will explain about refinancing a college loan.

First, we will go over federal student loans.
These college loans can either be subsidized or unsubsidized.

Subsidized loans are when the government pays the interest of the loan for the students. You must show that you are in great financial need in order to get this type of loan.

Unsubsidized loans are when the student must pay the interest, but the interest is not deferred until after graduation. Anyone can get an unsubsidized loan. Both of these types of federal student loans are the most commonly used.

The next are private student loans. Private student loans are given to someone with a good credit score. They can be used for anything, not just the cost of tuition. They are also unsecured. This means they require no collateral, but they have extremely high interest rates.

Now, we go to for parent loans. As you guessed, this is a loan that parents can take for the full amount of the college tuition. You just have to hope mommy and daddy are willing to do this for you! The payoff rate and interest rate is much lower with this type of loan, often because parents have good credit and the funds to pay the loan off.

Now we come to consolidation loans. This type of loan is used to consolidate all of a student’s loans together so they can be paid off in one easy payment plan to one lender, rather than having several payments to several lenders. Many students end up getting this type of college loan after they made the mistake of getting too many college loans at once.

Those of you, who do already have a loan, may be interested in refinancing. Refinancing college loans often seems like a good idea, and it is…if you use it to your advantage. I’ll explain that in a minute. First, you need to understand a few things. Most college loans are of a variable percentage rate until the rate is locked. You lock a rate by means of a loan consolidation or by refinancing. When rates are very low, it generally is a good idea to attempt to get your loans or loan consolidated or refinanced.

Before you can even think of refinancing, you must know that is only offered to you good people that have always made their monthly loan payment on time. If this does not sound like you, then I wish you good luck trying to refinance!

Refinancing rates are usually one or two percent lower than your original college loan rate. Refinancing rates can save you up to 60 percent. But this is where the possible drawback is – and most people simply don’t realize.

The “drawback” is a hidden one – that most people never see. In order to get your college loan payment lower through refinancing, you are given a much longer time period to pay the loan off. Instead of 5 years to pay it off, it can turn into 20 years to pay it off! This may sound good to you in the beginning. At the time, it will leave you with extra money that you may be in need of for other bills. But in the long run, it just costs you more money because you will be paying interest much longer to the lender. In fact, it can cost you thousands more!

The smart way to do it is after you refinance and obtain the lower rate; pay more towards the monthly bill. This way you will pay off your loan much quicker than normal and at a cheaper rate. But only put more towards paying it off when you can afford it. Remember you refinanced your college loan because you couldn’t afford the payment to begin with. So now you’ve refinanced just pay off your loan as best you can at your own pace, bearing the above in mind.

I hope I didn’t scare you too much. The important thing you have to remember is that most lenders gain money from you through the interest you pay them. If you pay your college loan off faster, you will make the lender less rich! Take a breather and use your head before you jump into anything.
In other words “look before you leap”.

© Luke Sharp 2005

Tags: College, Keys, Loan, Obtaining, Refinancing

Refinancing Online – Get The Best Refinance Home Loan You Can Get

When going to refinance or get a mortgage loan quote, the internet can be a useful tool to shop around for the best interest rate. The reason the internet is a good place to start applying, is because most mortgage applications online do not typically pull your credit with the first application. Most of the time, the application will ask you to describe your credit. Once you have received an initial offer, then, the mortgage loan consultant who contacts you will ask you if they can pull your credit.

The point is, there is really no risk in applying to many different mortgage companies or lenders online. This can help you compare refinance quotes from multiple lenders.

There are quite a few mortgage companies out there that will submit your pre-approval application to hundreds of lenders and then forward you the 4 best mortgage loan refinance quotes. To see a list of these companies, click on the link below. If you do this pre-approval process with about 3-4 companies, in less than 24 hours, you could have mortgage refinance quotes from about 12-16 lenders. Imagine how comfortable you would feel knowing what all of your refinance options are. If you had over 10 mortgage loan offers, you would not make the mistake of settling for a refinance loan that is not the best you can get.

When refinancing, you absolutely want to make sure of a few things before you settle on an offer:

1. Make absolutely sure that you are getting the lowest mortgage rate possible for your qualifications. With mortgage rates slowly on the rise, you want to make sure that you are not getting a mortgage loan any higher than you can qualify for. If you go direct through the lender and not use a broker middleman, sometimes that can help you get a lower interest rate.

2. Find out what your closing costs are going to be. You may be going back and forth with different lenders to get the lowest interest rate and then get dinged at the closing table with massive closing costs. Ask each lender that makes you an offer to give you an estimate on what the closing costs are going to be and compare the lenders.

3. Make sure the terms of the financing are what you want. If you want to have a variable interest rate, then get one. If you are more comfortable with a 5 year fixed rate, then make sure that you don’t get talked into settling for something less. You can’t refinance as often as you want, so you want to make sure you do it right, because once your done, you are locked in.

Take advantage of the internet and apply to many different mortgage companies that will provide you multiple offers. Do this to make sure you can compare offers from many different companies instead of taking a chance of getting what you don’t want.

Tags: Best, Home, Loan, Online, Refinance, Refinancing

Homeowners Are Now Cashing-in When Refinancing, Rather Than Cashing-out

For the better part of the past two decades, and even more so in the current decade, homeowners have opted to cash-out when they refinanced their mortgages. It was the basic principle of piling on more debt because, in general, the idea was that the real estate market was strong and that their home values could only increase. Currently, however, homeowners seem to have learned a valuable lesson of the housing crash and are deciding, when refinancing, to cash-in rather than drawing on the money freed up with the refinance.

The general concept in America for the past two decades has been to accumulate more debt, whether it was through credit or home loans, assuming that the value of their home would continue to increase, which it had through most of that period. Now the concept of saving is taking precedent.

Cash-outs reached their peak during the last decade, culminating in 2006 in which the rate of cash-outs hit 88 percent of home refinances. Taken into context, that number is nearly nine out of every ten homeowners who refinanced. These figures come from Freddie Mac, the mortgage giant that monitors refinances on a quarterly basis. When these homeowners cashed-out, they increased their mortgage balance by at least 5 percent, on average.

Then we all know what happened next. Between 2005 and 2009, the American homeowners lost more than $7 trillion in equity, according to Federal Reserve estimates. This evaporation of wealth was unprecedented and few populations or locations were spared. This has led to a shift in the psychological makeup of the average homeowner who is now looking for ways to reduce their debt burden. Last quarter, according to Freddie Mac, 33 percent of homeowners actually put cash into their refinancing loans to decrease their mortgage balances as well as aim for lower interest rates.

A great advantage to cashing-in on refinancing is that for homeowners who, for example, have a LTV (loan-to-value) ratio of 80%, will have to pay private mortgage insurance premiums and may also be subject to higher interest rates. Cashing-in and paying down the LTV to, let’s say 75%, the homeowner can avoid those costly private insurance premiums and also qualify for lower interest rates.

The rationalization for cashing-in on refinancing is simple and makes perfect sense, though it is not always clear to homeowners or mortgage brokers at the outset. First, with interest rates in the economy overall being as low as they are, money that is held in savings accounts are not earning much at all. Money market funds are not fairing all that much better, either. Paying down a home loan right now actually offers a better investment.

Cash-ins are, in essence, a more disciplined form of savings, though many homeowners still feel nervous about removing their liquid assets in a tight economy. Understandably with so much volatility in the economic and financial climate, with jobs still being shed and new ones being slow to evolve, tapping into a savings account may appear to be a risk on the surface. Yet the long-term savings by cashing-in on a refinance will far outweigh that of keeping it in a bank account.

What’s not clear yet about cash-ins is whether this is the beginning of a serious trend or merely a current plan of some homeowners to take advantage of sound financial advice. In 2007, cash-ins hit 9 percent of all refinances. By the final quarter of 2009, the number had jumped to more than 33 percent.

This trend may also be due to a tighter financial lending atmosphere, making it more difficult for homeowners to cash-out. It may also be a temporary, conservative approach until interest rates begin to climb once again. Whatever the case, if a homeowner has savings to tap into, then cashing-in may be a valuable, cost-saving option in the current mortgage and financial climate.

David

Tags: Cashingin, Cashingout, Homeowners, Rather, Refinancing, Than

Homeowners Are Now Cashing-in When Refinancing, Rather Than Cashing-out

For the better part of the past two decades, and even more so in the current decade, homeowners have opted to cash-out when they refinanced their mortgages. It was the basic principle of piling on more debt because, in general, the idea was that the real estate market was strong and that their home values could only increase. Currently, however, homeowners seem to have learned a valuable lesson of the housing crash and are deciding, when refinancing, to cash-in rather than drawing on the money freed up with the refinance.

The general concept in America for the past two decades has been to accumulate more debt, whether it was through credit or home loans, assuming that the value of their home would continue to increase, which it had through most of that period. Now the concept of saving is taking precedent.

Cash-outs reached their peak during the last decade, culminating in 2006 in which the rate of cash-outs hit 88 percent of home refinances. Taken into context, that number is nearly nine out of every ten homeowners who refinanced. These figures come from Freddie Mac, the mortgage giant that monitors refinances on a quarterly basis. When these homeowners cashed-out, they increased their mortgage balance by at least 5 percent, on average.

Then we all know what happened next. Between 2005 and 2009, the American homeowners lost more than $7 trillion in equity, according to Federal Reserve estimates. This evaporation of wealth was unprecedented and few populations or locations were spared. This has led to a shift in the psychological makeup of the average homeowner who is now looking for ways to reduce their debt burden. Last quarter, according to Freddie Mac, 33 percent of homeowners actually put cash into their refinancing loans to decrease their mortgage balances as well as aim for lower interest rates.

A great advantage to cashing-in on refinancing is that for homeowners who, for example, have a LTV (loan-to-value) ratio of 80%, will have to pay private mortgage insurance premiums and may also be subject to higher interest rates. Cashing-in and paying down the LTV to, let’s say 75%, the homeowner can avoid those costly private insurance premiums and also qualify for lower interest rates.

The rationalization for cashing-in on refinancing is simple and makes perfect sense, though it is not always clear to homeowners or mortgage brokers at the outset. First, with interest rates in the economy overall being as low as they are, money that is held in savings accounts are not earning much at all. Money market funds are not fairing all that much better, either. Paying down a home loan right now actually offers a better investment.

Cash-ins are, in essence, a more disciplined form of savings, though many homeowners still feel nervous about removing their liquid assets in a tight economy. Understandably with so much volatility in the economic and financial climate, with jobs still being shed and new ones being slow to evolve, tapping into a savings account may appear to be a risk on the surface. Yet the long-term savings by cashing-in on a refinance will far outweigh that of keeping it in a bank account.

What’s not clear yet about cash-ins is whether this is the beginning of a serious trend or merely a current plan of some homeowners to take advantage of sound financial advice. In 2007, cash-ins hit 9 percent of all refinances. By the final quarter of 2009, the number had jumped to more than 33 percent.

This trend may also be due to a tighter financial lending atmosphere, making it more difficult for homeowners to cash-out. It may also be a temporary, conservative approach until interest rates begin to climb once again. Whatever the case, if a homeowner has savings to tap into, then cashing-in may be a valuable, cost-saving option in the current mortgage and financial climate.

David

Tags: Cashingin, Cashingout, Homeowners, Rather, Refinancing, Than

Homeowners Are Now Cashing-in When Refinancing, Rather Than Cashing-out

For the better part of the past two decades, and even more so in the current decade, homeowners have opted to cash-out when they refinanced their mortgages. It was the basic principle of piling on more debt because, in general, the idea was that the real estate market was strong and that their home values could only increase. Currently, however, homeowners seem to have learned a valuable lesson of the housing crash and are deciding, when refinancing, to cash-in rather than drawing on the money freed up with the refinance.

The general concept in America for the past two decades has been to accumulate more debt, whether it was through credit or home loans, assuming that the value of their home would continue to increase, which it had through most of that period. Now the concept of saving is taking precedent.

Cash-outs reached their peak during the last decade, culminating in 2006 in which the rate of cash-outs hit 88 percent of home refinances. Taken into context, that number is nearly nine out of every ten homeowners who refinanced. These figures come from Freddie Mac, the mortgage giant that monitors refinances on a quarterly basis. When these homeowners cashed-out, they increased their mortgage balance by at least 5 percent, on average.

Then we all know what happened next. Between 2005 and 2009, the American homeowners lost more than $7 trillion in equity, according to Federal Reserve estimates. This evaporation of wealth was unprecedented and few populations or locations were spared. This has led to a shift in the psychological makeup of the average homeowner who is now looking for ways to reduce their debt burden. Last quarter, according to Freddie Mac, 33 percent of homeowners actually put cash into their refinancing loans to decrease their mortgage balances as well as aim for lower interest rates.

A great advantage to cashing-in on refinancing is that for homeowners who, for example, have a LTV (loan-to-value) ratio of 80%, will have to pay private mortgage insurance premiums and may also be subject to higher interest rates. Cashing-in and paying down the LTV to, let’s say 75%, the homeowner can avoid those costly private insurance premiums and also qualify for lower interest rates.

The rationalization for cashing-in on refinancing is simple and makes perfect sense, though it is not always clear to homeowners or mortgage brokers at the outset. First, with interest rates in the economy overall being as low as they are, money that is held in savings accounts are not earning much at all. Money market funds are not fairing all that much better, either. Paying down a home loan right now actually offers a better investment.

Cash-ins are, in essence, a more disciplined form of savings, though many homeowners still feel nervous about removing their liquid assets in a tight economy. Understandably with so much volatility in the economic and financial climate, with jobs still being shed and new ones being slow to evolve, tapping into a savings account may appear to be a risk on the surface. Yet the long-term savings by cashing-in on a refinance will far outweigh that of keeping it in a bank account.

What’s not clear yet about cash-ins is whether this is the beginning of a serious trend or merely a current plan of some homeowners to take advantage of sound financial advice. In 2007, cash-ins hit 9 percent of all refinances. By the final quarter of 2009, the number had jumped to more than 33 percent.

This trend may also be due to a tighter financial lending atmosphere, making it more difficult for homeowners to cash-out. It may also be a temporary, conservative approach until interest rates begin to climb once again. Whatever the case, if a homeowner has savings to tap into, then cashing-in may be a valuable, cost-saving option in the current mortgage and financial climate.

David

Tags: Cashingin, Cashingout, Homeowners, Rather, Refinancing, Than

Homeowners Are Now Cashing-in When Refinancing, Rather Than Cashing-out

For the better part of the past two decades, and even more so in the current decade, homeowners have opted to cash-out when they refinanced their mortgages. It was the basic principle of piling on more debt because, in general, the idea was that the real estate market was strong and that their home values could only increase. Currently, however, homeowners seem to have learned a valuable lesson of the housing crash and are deciding, when refinancing, to cash-in rather than drawing on the money freed up with the refinance.

The general concept in America for the past two decades has been to accumulate more debt, whether it was through credit or home loans, assuming that the value of their home would continue to increase, which it had through most of that period. Now the concept of saving is taking precedent.

Cash-outs reached their peak during the last decade, culminating in 2006 in which the rate of cash-outs hit 88 percent of home refinances. Taken into context, that number is nearly nine out of every ten homeowners who refinanced. These figures come from Freddie Mac, the mortgage giant that monitors refinances on a quarterly basis. When these homeowners cashed-out, they increased their mortgage balance by at least 5 percent, on average.

Then we all know what happened next. Between 2005 and 2009, the American homeowners lost more than $7 trillion in equity, according to Federal Reserve estimates. This evaporation of wealth was unprecedented and few populations or locations were spared. This has led to a shift in the psychological makeup of the average homeowner who is now looking for ways to reduce their debt burden. Last quarter, according to Freddie Mac, 33 percent of homeowners actually put cash into their refinancing loans to decrease their mortgage balances as well as aim for lower interest rates.

A great advantage to cashing-in on refinancing is that for homeowners who, for example, have a LTV (loan-to-value) ratio of 80%, will have to pay private mortgage insurance premiums and may also be subject to higher interest rates. Cashing-in and paying down the LTV to, let’s say 75%, the homeowner can avoid those costly private insurance premiums and also qualify for lower interest rates.

The rationalization for cashing-in on refinancing is simple and makes perfect sense, though it is not always clear to homeowners or mortgage brokers at the outset. First, with interest rates in the economy overall being as low as they are, money that is held in savings accounts are not earning much at all. Money market funds are not fairing all that much better, either. Paying down a home loan right now actually offers a better investment.

Cash-ins are, in essence, a more disciplined form of savings, though many homeowners still feel nervous about removing their liquid assets in a tight economy. Understandably with so much volatility in the economic and financial climate, with jobs still being shed and new ones being slow to evolve, tapping into a savings account may appear to be a risk on the surface. Yet the long-term savings by cashing-in on a refinance will far outweigh that of keeping it in a bank account.

What’s not clear yet about cash-ins is whether this is the beginning of a serious trend or merely a current plan of some homeowners to take advantage of sound financial advice. In 2007, cash-ins hit 9 percent of all refinances. By the final quarter of 2009, the number had jumped to more than 33 percent.

This trend may also be due to a tighter financial lending atmosphere, making it more difficult for homeowners to cash-out. It may also be a temporary, conservative approach until interest rates begin to climb once again. Whatever the case, if a homeowner has savings to tap into, then cashing-in may be a valuable, cost-saving option in the current mortgage and financial climate.

David

Tags: Cashingin, Cashingout, Homeowners, Rather, Refinancing, Than

Homeowners Are Now Cashing-in When Refinancing, Rather Than Cashing-out

For the better part of the past two decades, and even more so in the current decade, homeowners have opted to cash-out when they refinanced their mortgages. It was the basic principle of piling on more debt because, in general, the idea was that the real estate market was strong and that their home values could only increase. Currently, however, homeowners seem to have learned a valuable lesson of the housing crash and are deciding, when refinancing, to cash-in rather than drawing on the money freed up with the refinance.

The general concept in America for the past two decades has been to accumulate more debt, whether it was through credit or home loans, assuming that the value of their home would continue to increase, which it had through most of that period. Now the concept of saving is taking precedent.

Cash-outs reached their peak during the last decade, culminating in 2006 in which the rate of cash-outs hit 88 percent of home refinances. Taken into context, that number is nearly nine out of every ten homeowners who refinanced. These figures come from Freddie Mac, the mortgage giant that monitors refinances on a quarterly basis. When these homeowners cashed-out, they increased their mortgage balance by at least 5 percent, on average.

Then we all know what happened next. Between 2005 and 2009, the American homeowners lost more than $7 trillion in equity, according to Federal Reserve estimates. This evaporation of wealth was unprecedented and few populations or locations were spared. This has led to a shift in the psychological makeup of the average homeowner who is now looking for ways to reduce their debt burden. Last quarter, according to Freddie Mac, 33 percent of homeowners actually put cash into their refinancing loans to decrease their mortgage balances as well as aim for lower interest rates.

A great advantage to cashing-in on refinancing is that for homeowners who, for example, have a LTV (loan-to-value) ratio of 80%, will have to pay private mortgage insurance premiums and may also be subject to higher interest rates. Cashing-in and paying down the LTV to, let’s say 75%, the homeowner can avoid those costly private insurance premiums and also qualify for lower interest rates.

The rationalization for cashing-in on refinancing is simple and makes perfect sense, though it is not always clear to homeowners or mortgage brokers at the outset. First, with interest rates in the economy overall being as low as they are, money that is held in savings accounts are not earning much at all. Money market funds are not fairing all that much better, either. Paying down a home loan right now actually offers a better investment.

Cash-ins are, in essence, a more disciplined form of savings, though many homeowners still feel nervous about removing their liquid assets in a tight economy. Understandably with so much volatility in the economic and financial climate, with jobs still being shed and new ones being slow to evolve, tapping into a savings account may appear to be a risk on the surface. Yet the long-term savings by cashing-in on a refinance will far outweigh that of keeping it in a bank account.

What’s not clear yet about cash-ins is whether this is the beginning of a serious trend or merely a current plan of some homeowners to take advantage of sound financial advice. In 2007, cash-ins hit 9 percent of all refinances. By the final quarter of 2009, the number had jumped to more than 33 percent.

This trend may also be due to a tighter financial lending atmosphere, making it more difficult for homeowners to cash-out. It may also be a temporary, conservative approach until interest rates begin to climb once again. Whatever the case, if a homeowner has savings to tap into, then cashing-in may be a valuable, cost-saving option in the current mortgage and financial climate.

David

Tags: Cashingin, Cashingout, Homeowners, Rather, Refinancing, Than

Homeowners Are Now Cashing-in When Refinancing, Rather Than Cashing-out

For the better part of the past two decades, and even more so in the current decade, homeowners have opted to cash-out when they refinanced their mortgages. It was the basic principle of piling on more debt because, in general, the idea was that the real estate market was strong and that their home values could only increase. Currently, however, homeowners seem to have learned a valuable lesson of the housing crash and are deciding, when refinancing, to cash-in rather than drawing on the money freed up with the refinance.

The general concept in America for the past two decades has been to accumulate more debt, whether it was through credit or home loans, assuming that the value of their home would continue to increase, which it had through most of that period. Now the concept of saving is taking precedent.

Cash-outs reached their peak during the last decade, culminating in 2006 in which the rate of cash-outs hit 88 percent of home refinances. Taken into context, that number is nearly nine out of every ten homeowners who refinanced. These figures come from Freddie Mac, the mortgage giant that monitors refinances on a quarterly basis. When these homeowners cashed-out, they increased their mortgage balance by at least 5 percent, on average.

Then we all know what happened next. Between 2005 and 2009, the American homeowners lost more than $7 trillion in equity, according to Federal Reserve estimates. This evaporation of wealth was unprecedented and few populations or locations were spared. This has led to a shift in the psychological makeup of the average homeowner who is now looking for ways to reduce their debt burden. Last quarter, according to Freddie Mac, 33 percent of homeowners actually put cash into their refinancing loans to decrease their mortgage balances as well as aim for lower interest rates.

A great advantage to cashing-in on refinancing is that for homeowners who, for example, have a LTV (loan-to-value) ratio of 80%, will have to pay private mortgage insurance premiums and may also be subject to higher interest rates. Cashing-in and paying down the LTV to, let’s say 75%, the homeowner can avoid those costly private insurance premiums and also qualify for lower interest rates.

The rationalization for cashing-in on refinancing is simple and makes perfect sense, though it is not always clear to homeowners or mortgage brokers at the outset. First, with interest rates in the economy overall being as low as they are, money that is held in savings accounts are not earning much at all. Money market funds are not fairing all that much better, either. Paying down a home loan right now actually offers a better investment.

Cash-ins are, in essence, a more disciplined form of savings, though many homeowners still feel nervous about removing their liquid assets in a tight economy. Understandably with so much volatility in the economic and financial climate, with jobs still being shed and new ones being slow to evolve, tapping into a savings account may appear to be a risk on the surface. Yet the long-term savings by cashing-in on a refinance will far outweigh that of keeping it in a bank account.

What’s not clear yet about cash-ins is whether this is the beginning of a serious trend or merely a current plan of some homeowners to take advantage of sound financial advice. In 2007, cash-ins hit 9 percent of all refinances. By the final quarter of 2009, the number had jumped to more than 33 percent.

This trend may also be due to a tighter financial lending atmosphere, making it more difficult for homeowners to cash-out. It may also be a temporary, conservative approach until interest rates begin to climb once again. Whatever the case, if a homeowner has savings to tap into, then cashing-in may be a valuable, cost-saving option in the current mortgage and financial climate.

David

Tags: Cashingin, Cashingout, Homeowners, Rather, Refinancing, Than