“Cashing In” on a Refinance
As European sovereign debt concerns send Markets churning and U.S. mortgage rates lower and lower, one type of refinancing has been at an all time high. However, not in the way we have been used to over the last decade.
“One in three borrowers, 33 percent, who refinanced their loan in the fourth quarter of 2009, lowered their principal balance, the highest “cash-in” share since Freddie Mac’s quarterly Refinance Report began tracking the refinance data.” Broderick Perkins-RealtyTimes.com
Moreover, the number of borrowers who increased their loan balances by cashing out is at an all time low.
Click here for more on the national “Cash in” refinance story 
National numbers can sometimes be misleading when applied to local markets, so I chose to confirm these findings with local Chicago mortgage lenders. They report about 20 percent doing “cash in” refinances which is “definitely higher than it has ever been.” – Joe Burke of YourChicagoMortgageGuy. This compares to a negligible percentage doing “cash out” refinances. While the numbers did not line up exactly, the trend is certainly in tact and has continued into 2010.
It is important to note that it would be impossible for a country to get its’ financial house in order if the individual citizens refuse to do so. In light of the increase in personal savings rate last year, credit card delinquencies coming off of their peak, and the refinancing statistics above, it seems the american public has taken major steps in rectifying household balance sheets. Good news in a still deleveraging, but slowly stabilizing economy.
Please leave a comment if you have questions about what you read here or would like me to post on a specific topic. Whether or not you are currently a client of mine, I am happy to open this forum for discussion or to answer individual questions.
Best,
JLC
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