Cash-out refinance applications have jumped 35 percent over the past quarter as homeowners leverage record-high equity positions to fund renovations, consolidate debt, and cover major expenses. The average homeowner now holds over $120,000 in tappable equity.
Mortgage advisors caution that cash-out refinancing resets the loan term and may increase the total interest paid over the life of the mortgage. Borrowers should compare the cost against alternatives like home equity lines of credit or personal loans.
Despite the surge in activity, underwriting standards remain relatively tight, with most lenders requiring a maximum combined loan-to-value ratio of 80 percent.
