While the media is full of stories on underwater borrowers walking away from their homes, some homeowners are actually seizing the opportunities presented by today’s lousy seller’s market and record-low interest rates to refinance – with money at closing – or even trade up on their existing homes[1]. If you have the wherewithal to “retire” your old mortgage, you can actually refinance your home on shorter terms or at dramatically lower interest rates that result in lower monthly payments, shorter loan durations or even both: a magic combination.
Real estate brokers report that while last year not many clients were interested in kicking in cash to sell their homes, this year “about half are willing to bring money to the closing, anywhere from $5,000 to $45,000.” This willingness to pay off an underwater property stems from the knowledge that for the same amount – or less – that they are paying on their current home, they could literally double their living space in many cases. “Cash in” refinancing, in which case a homeowner pays off an old loan in order to refinance at their home’s newer (and right now, often lower) value, is also on the rise.
Do you think that this trade-in and trade-up trend is good or bad for the real estate market and for real estate investors?
Thank you for reading! Your comments and questions are welcomed below.
[1]http://online.wsj.com/article/SB10001424052748704421304575383490870014662.html
