Cash-out Mortgage Refi’s are Back

Considering a cash-out refi?

Bankrate.com says homeowners pulled $70 billion in equity from their homes in cash-out refinances in the third quarter 2021. It was the highest rate in over 14 years. Higher home values reflected lower loan-to-value ratios. It’s led to the lowest total market leverage ever recorded – the average borrower’s mortgage debt is just 45%. Want to jump on the wagon? A cash-out refi makes sense if you need to cover home improvements or repairs. Research what brings lasting value, like updating your kitchen or bathrooms. Using your mortgage to get a new HVAC or roof may be the cheapest money you’ll find. On the other hand, don’t refi for cash to go on vacation, buy consumer goods, or pay your bills. Instead, find ways to increase your income or decrease expenses. You could also do a simple refi to get a lower payment and pay down debt.

Using a cash-out refi to pay down private student loans at high rates could also be beneficial, but not Federal loans with reasonable interest rates. Financial pros say that cash-out refi’s can be wisely used to boost retirement savings if placed in a diversified portfolio. Otherwise, you could lose it all day-trading or buying volatile stocks like crypto. We don’t know how long home values will last. So, proceed with caution. Do your research and pray for wisdom.

Are you tempted to do a cash-out refi because you’re overloaded with credit card debt? Contact Christian Credit Counselors. They’ll create a debt management plan just for you. For more information call the Crown Helpline: 800-722-1976 or visit online at crown.org/ccc.