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Surprise! More Home Equity = More Cash-Out Refinances

Monday, October 5, 2015

While they aren't doing it at nearly the rate they did before the Great Recession, Americans are increasingly tapping the equity in their homes with cash-out refinancing.  Black Knight Financial Services says in its latest Mortgage Monitor Report released on Monday that cash-out refinances in the second quarter were at the highest rate in five years.

Lack of equity prevented many homeowners from refinancing at all for a number of years and they could not take advantage of the historically low interest rates.  Now rising home prices have restored many to positive equity positions and even to having "tappable" equity based on an 80 percent combined loan-to-value (CLTV) ratio.  Black Knight says total home equity is at its highest level since 2007, up nearly $1 trillion since last year, about $19,000 more per borrower.  Fifty-nine percent of that equity or about $4.5 trillion, is tappable.

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