As property values continue to rise, cash-out refinance opportunities have jumped along with them for homeowners to take advantage of record amounts of equity.
As home prices continue to surge and mortgage rates remain lower than usual, borrowers are able to qualify for bigger mortgages and access larger amounts of cash.
Home prices have been steadily increasing for a while now, but low mortgage rates in response to the pandemic have allowed purchasing power to remain strong.
Homeowners are tapping into these record amounts of equity with cash-out refinances or HELOCs so they can use this cash for home improvement projects or paying down debts.
Meanwhile, mortgage lenders and brokers are encouraging cash-out refinance or HELOC opportunities through aged leads.
While many homeowners have caught onto the refinance boom to access a better rate and terms and tap into their equity, many others still are unaware of how their home may have increased in value.
Homeowners may not realize that as their neighbors’ homes sell for higher prices, the value of theirs increases as well — even if their home is not for sale.
Lending professionals can inform homeowners about the appraisal process that goes along with a refinance, so the new value of the home is accurately identified.
With aged leads, lending professionals are able to target homeowners interested in refinancing who have maximum cash-out potential. These leads come from people who have requested the types of information a lender can provide.
Leads can be filtered by type, age, state, zip code, loan type, and more, so lending professionals can present the right information to homeowners.
At the start of the pandemic, there was $6.5 trillion of home equity available to cash out. Now, there’s a record $9.1 trillion available.
Experts are split on home value growth percentages into 2022, with some predicting a continued surge while others anticipate a slow-down.
Mortgage rates currently are on the rise, which means cash-out opportunities have slowed as homeowners respond to the rate increases.
Experts are focused on two main unknowns: How high mortgage rates are going to rise, and whether supply chain and material shortage issues will continue into 2022.
High mortgage rates would further reduce borrowing and refinance opportunities, and supply issues would reduce the number of homes available.
Despite these unknowns, opportunities remain for certain borrowers to tap into their equity and receive a significant amount of cash while rates and values adjust in an ever-changing market.