The new norm is here, with rates at a 4 year high, borrowers are still interested in cashing out and paying debts regardless.
While homeowners enjoyed the low rates of the past 4 years, rates increasing to a 4 year high did not slow down borrowers from cashing out and paying debts this spring. The landscape of the mortgage industry has drastically changed from just 6 months ago. With rates rising nearly half a percent or more, the ability to refinance and lower your rate is nearly extinct. However savvy homeowners are willing to trade up their rate within reason, usually half to a full percentage point, to enjoy the luxury of their homes new found equity. With rates still very attractive and near an all time low, homeowners paid off debt, grabbed cash for home improvements or build a nest egg in cash. Many homeowners remembered the last recession and the difficulty in using their homes equity as it grew. With fears of another recession looming, homeowners are preparing to weather the storm with less debt, a house in upgraded condition or just more in savings. Learning from the last recession homeowners know the value of their own equity when needed, out weighs a small increase in interest, especially with rates still near all time lows.
Many homeowners who initially began an application in the last 90 days have finally pulled the trigger to start a loan and lock their rate seeing that rates have not improved. A unique advantage to working with Ladera Ranch Home Loans is they offer a loyalty program that will allow you to refinance for FREE for up to 2 years after your refinance if rates improve. Most loans now come without a prepayment penalty so borrowers are encouraged to refinance anytime rates drop and they are able to refinance back into a lower rate. Without a crystal ball to predict tomorrows rates taking advantage of where they are today continues to be a lure for homeowners.
Borrowers that were quoted rates higher than they expected the last 90 days only called back to begin their loan with their lender just to find out they no longer qualify. A half percentage point in rate can mean the difference of someone qualifying for a refinance or even a purchase. Experts warn this is not the time to procrastinate if you are in the market for a loan, if you are offered a rate that meets your needs and goals, be very careful, chances are it may not be there for long.
It will be interesting to see how housing plays a role this summer, which typically drives higher home prices. However with rates on the rise we are already seeing several areas of the country cooling off. It can be expected that home prices would drop based on a borrowers ability to afford. Higher rates mean less that can be borrowed This will shape out to be an interesting year for sure. One things certain, those that have less debt and more savings will be in the best shape. To learn more about Cashing Out for any reason or Debt Consolidation Loan with Ladera Ranch Home Loans call 1-877-353-9527
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