According to the Mortgage Bankers Association, cash out refinancing has reached a new high during the recent weeks. This trend has surprised the analysts. Mortgage rates were very low for years. As the prices of homes have soared now, people are converting their equity into cash by taking the advantage of cash out refinancing.
As the repayment of these loans is spread over decades, the monthly payment is lower than other type of loans. Also, the interest payments are tax deductible. These features drive the people to opt for cash out refinancing. Irrespective of the lucrative features, it should be kept in mind that long-term borrowing should be used only for long-term needs. chron.com reports:
Today, the average 30-year, fixed-rate mortgage charges about 5.6 percent, the association says. You can't beat that rate borrowing on a credit card or with a personal loan at a bank.
Read More: Shaking cash out of the house
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