Rising Home Values Can Boost Your Mortgage Refinance

Rising mortgage rates are cutting the flow of mortgage refinances to a trickle. By now, many people who could have benefited from a lower rate have done so. However, if you’re thinking about refinancing but are hesitating because of interest rates, there’s something else to consider that can make a mortgage refinance worthwhile: rising property values.

Home prices are on the rise

Home prices were up 7.1% year-over-year in November, according to a national report just issued by real estate analytics firm CoreLogic.

‘Home prices continue to march higher, with home prices in 27 states above their pre-crisis peak levels,’ Anand Nallathambi, president and CEO of CoreLogic, said in a release. ‘Nationally, the CoreLogic Home Price Index remains 4% below its April 2006 peak but should surpass that peak by the end of 2017.’

You may finally be able to tap home equity

Even though mortgage rates are moving higher, appreciation in your home might let you make a mortgage move that you might not have been eligible for previously. Here’s how higher home values can affect your mortgage refinance opportunities:

A cash-out refinance. If you’ve weighed a lower mortgage rate against loan costs and decided a refinance seems to be a toss-up, this could be the tiebreaker: a cash-out refinance. Tapping some of your home’s value in a cash-out refi can let you make improvements to your home and property. That adds value to your home in the long term.

Refinance away mortgage insurance. As home prices have climbed, fewer American homeowners are underwater or face ‘negative equity’ ” owing more on a home than its market value. In the past five years, more than 10 million households have risen above negative equity. In December, Zillow research found that fewer than 5.3 million homeowners with a mortgage are underwater. That’s down from a 2012 peak of more than 15.7 million homeowners.

Rising home equity allows another refinance opportunity: removing mortgage insurance.

Source:  Panama City News Herald

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