As reported today in many news outlets, nationwide applications for home mortgages increased 11.6 percent from one week earlier. The numbers were provided by the Mortgage Bankers Association’s weekly survey.
The headline speculated that the reason for the significant increase was the lower interest rate. Calling the decline in mortgage interest rates modest, Brothers Redevelopment Director of Housing Counseling Shannon Peer feels there may be other factors involved.
By far the biggest chunk of those mortgage applications – 65 percent – were to refinance home mortgages. That represents an increase in refinances of 23 percent.
There are many and varied reasons why homeowners might consider refinancing, Peer said. He suggested the significant increase in metro-area home values coupled with a decrease in rates might mean locally homeowners could have the ability to refinance and cash out some of their home equity.
“In the local market where our housing inventory is low, it is easy to sell, but then you may have a challenge buying a new place. This scenario may be convincing people to hunker down and improve the place they currently own,” Peer said.
The cardinal rule in refinancing, he said, is a thorough and accurate calculation of costs vs. benefits. Housing counselors at Brothers Redevelopment – a HUD-approved counseling agency – can help any homeowner walk through that analysis, Peer said. The counseling at Brothers is free. To learn more, call 1-844-926-6632 or go to www.coloradohousingconnects.org.