Since property values are rising, homeowners are taking advantage of cash-out refinancing. According to Black Knight Financial Services, these types of transactions have seen their highest increase in half a decade.
Over the past year, more than $1 trillion has been gained by mortgage holders. This number is being compared to the housing boom of 2006. Although the volume is promising, it is nowhere near its peak.
Fortunately, if you decide to borrow in this manner, you are in a better equity position than before. Back 10 years ago, borrowers sucked every last cent out of their real estate like it was an ATM machine. Today, the average loan-to-value ratio is 68 percent, which means you can only leverage 68 percent of your current home value. This helps capitalize on price appreciation into the long term without worry.
Like many other individuals, you may continue to enjoy a low rate mortgage and decide to remodel your current home instead of buying something new. This trend is expected to continue into next year. John Burns Real Estate Consulting has conducted a study that shows remodeling projects may grow by 10 percent in 2016.
Although you may be worried about what will happen when the home value appreciation numbers flatten, you should be confident in lenders. After the difficulties of the past, they are acting wisely and are not allowing borrowers to have amounts that are impractical. This means you will be in a good position if and when you decide to sell.
