A few years ago it was about ‘cash-out’ refi’s and today it’s about ‘cash-in’ refi’s. From Kenneth Harney, a business reporter for the LA Times, ‘Cash-in’ refis growing in popularity:
In Freddie Mac’s latest quarterly survey of refinancings, 33% of homeowners put cash into the deal to lower their mortgage balances, the highest percentage ever. By contrast, only 27% of refinancers took cash out — the lowest percentage on record.
… there has been a steady rise since the fourth quarter of 2007, when cash-ins hit 9%, up from just 5% of all refis earlier that year.
By early 2009, they accounted for 13% of refinancings, then grew to 18% in the third quarter. After that, cash-ins jumped to 33% in the final three months of 2009.
The LA Times article notes two main reasons for “cash-in” refis:
1) Paying down the mortgage can get the borrower a better loan and avoid PMI.
2) With interest rates so low on money market funds and CDs, paying down the mortgage offers a higher return.
Have you done a ‘cash-in’ refi?
File Under: Going in the right direction.