Cash-Out Refinancing Interests Twice as Many Borrowers, Says GuideToLenders.com
Homeowners have shown increasing interest in refinancing to convert their home equity into cash, according to a poll on GuideToLenders.com, an online consumer resource for obtaining competing mortgage quotes. Exactly twice as many homeowners selected "receiving cash at closing" as their reason for refinancing in April than in February. And other studies confirm this as well -- Dow Jones MarketWatch claims that as the prime rate increases, other types of financing have become more expensive, prompting more people to tap into their home equity.
(PRWEB) July 3, 2007 -- A recent poll by GuideToLenders.com, an online consumer resource for broker and lender information, indicated the homeowners are increasingly interested in mortgage refinancing to receive cash at closing (http://www.guidetolenders.com/). Exactly twice as many borrowers selected this reason as their top motivation for refinancing in April than did in February. Other studies support the idea that homeowners are using their home equity to pay consumer debt such as credit cards or variable rate home equity lines of credit, which are tied to an increasing prime rate. According to Dow Jones MarketWatch, mortgage giant Freddie Mac reported the highest percentage of its refinances (89 percent) since 1990 included cashing out home equity.
Recent data points to paying off debt as the number one reason for cash-out refinances. In an extensive study entitled "The Plastic Safety Net -- The Reality Behind Debt in America," public policy organization Demos found that over half the respondents used proceeds from a cash-out refinance or home equity loan to pay credit card debt. The study concludes that economic conditions (less income stability, increasing energy and other necessary expenses with little gain in wages, and lower rates of employees with health insurance) have contributed to the fact that credit card debt has risen by 31 percent in the last 5 years. Seventy percent of those surveyed reported using credit cards to cover basic needs or emergencies such as medical bills or car repairs in the last 12 months.
Additionally, credit card rates have climbed to an average of 16 percent but can be raised to over 25 percent for missing a payment or exceeding the credit limit. At approximately 10 percent lower, mortgage rates make cash-out refinancing a sensible option for many. GuidetoLenders.com (http://www.guidetolenders.com/) and GuidetoRealty.com (http://www.guidetorealty.com/) both offer home equity calculators that homeowners can access to estimate the amount of equity in their homes and how much consumer debt they might be able to pay off.
GuideToLenders.com is a consumer resource featuring guides on how to find the right lender or broker to provide options to best suit consumers' needs. The site has a variety of free tools and tips and provides an easy way to find multiple lenders to help consumers with their lending needs. Products offered by the lenders/brokers include new home financing, refinancing, home equity line of credit and debt consolidation loans.
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