Should You Refinance Into a Bigger Mortgage?

More and more homeowners who are refinancing their mortgages want more than a lower interest rate. They want some extra spending money. In a cash-out refinance, borrowers can withdraw equity from their residences at the same time as they alter the interest rate on their monthly mortgage. Such transactions typically grow in popularity as home values rise with such funds being pulled out to cover home repairs, pay down debt, or cover such costs as college tuition. Homeowners, though, need to make sure they are not digging themselves too deeply into another debt hole that could come back to bite them should housing prices fall. To this end, they should look into whether other alternative moves might accomplish the same objectives at a lower cost. Lenders completed a total of 243,847 cash-out refinances from July through September — a 32 percent increase from the second quarter and a 6 percent gain from the third quarter of 2013, according to Black Knight Financial Services. Cash-out refis accounted for 31 percent of all refinancing activity in this year’s third quarter versus 18 percent during the same period a year prior. That was the highest share since the last three months of 2008. | Read More