The process of a cash-out refinancing consists in converting a portion of home equity into money on top of the mortgage balance. Back in 2004-2007, it used to be the rage. About 9/10 owners would pull money out from their homes considering refinancing. Nevertheless, when the bubble exploded, equity holdings collapsed and such procedures vanished.
Now that home equity is higher in a lot of markets, one tend to observe a comeback. Cash-out refinancing funded at the beginning of the year went up by 47% from 2014 to 2015. It had already rose by 78% as compared to 2013. Overall, the $ volume of cash-outs has increased in 2015 even if the portion of cash-outs among refinancing means is down as compared to last year.
However, it has become harder to qualify for cash-out refinancing in 2015. Nothing compares to the happy years when nobody would see any evil. The rue is to retain at least 20% of equity in the home after considering the new debt. Then, the income and ability to support it needs to be documented. The underwriting part has become tougher than for term refinancing and traditional rate. The main focus is on the debt-to-income ratios. Most of these procedures are done in the purpose of house remodeling or debt consolidation, that is to say to improve financial situations and increase property values on the market.
That should not be the first way though: do it only while interest rates are interesting if you can pass the underwriter and have a constructive and valuable goal for the invested money.