Cash-Out Refinancing in Idaho: A Rising Trend in 2020?
Sammamish Mortgage
Loan
5 years ago
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Summary: Mortgage interest rates have been lingering at very low levels for a long time, and they’re expected to continue to be subdued throughout 2020. Considering this, many homeowners in Idaho are thinking about refinancing their home loans to take advantage of lower interest rates and save a lot of money on their mortgages. Is this an increasing trend in ID?

Is 2020 the year that you should refinance your mortgage in Idaho?

The average home price in Idaho is rapidly steadily. In fact, the market in the state is considered on very hot right now, and prices are still on a rather steep climb.

As of January 2020, the average price for a home in Idaho is $288,000. Values for homes in the state have increased a whopping 9.8% over the past year and are expected to continue at a strong pace with an increase of 5.2% over the next 12 months. With property values on the rise to this degree, homeowners are benefiting from increased equity in their homes simply from appreciation.

Interest rates for mortgages continue to remain very low as well. Right now, rates are hovering around the 3.6% mark as of the third week of January 2020 and are expected to stay under 4% for the remainder of 2020.

Considering the price appreciation of homes in the state along with lower interest rates, now may be a great time for homeowners to take out a cash-out refinance to tap into their home equity and lock in at a much lower rate compared to what they may be currently paying on their mortgage. The funds obtained from a cash-out refinance can then be put to good use for things such as home renovation projects that can help put even more value into their homes.

It’s anticipated that cash-out refinances will be an ongoing trend in Idaho through 2020, particularly as rates continue to remain low over the past few months compared to where they were just last year.

Here is some up-to-date insight on cash-out refinancing and home-price trends in Idaho.

Cash-Out Refinancing in Idaho

“Cash-out refinancing” is a type of refinancing program in which homebuyers take out a mortgage that’s larger than the original loan amount on the current mortgage they are paying. The difference between the two loan mounts can be converted into cash and can then be used to put towards a myriad of expenses, including home renovation projects and car repairs, among other expensive expenditures.

Considering the fact that home prices have appreciated quite a bit in Idaho throughout the years, homeowners who have been diligently paying their mortgages throughout this time have been able to take advantage of a hike in home equity. That equity can be tapped into and converted into cash through a cash-out refinance program to be used for various needs.

The fact that mortgage rates continue to remain rather low relative to years past makes today a particular advantageous time to consider a cash-out refinance, especially if there is a big discrepancy between today’s rates and the rates that homeowners have locked into when they originally took out their mortgages. If the rate that you locked into when you initially secured a mortgage is higher than today’s rates, you may stand to save quite a bit of money in interest, in addition to the benefit of accessing liquid cash from your home equity.

To illustrate how much money you can save by refinancing at a lower rate, let’s assume you currently have an outstanding balance on your original mortgage of $250,000, and your home’s current value is $450,000. That means you have $200,000 in equity in the home. You may be able to refinance your home more than the $250,000 that you still owe. If, for example, you need $50,000 to cover a pressing expense, you can tap into your home equity to access that amount. Then, you may refinance your mortgage for $300,000, which is the sum of the $250,000 you still owe plus the $50,000 you require in cash.

This is a simplified example of how a refinance works, but it should give you an idea of how you can use your home equity to convert into cash. Your mortgage specialist will be able to explain all the variations of refinancing programs that may be available to you.

Related: Cash Out Refinance After a New Purchase?

Use Today’s Lower Interest Rates To Your Advantage

With interest rates as low as they are these days, there’s a good chance that the rate you are paying on your current mortgage is higher. As of January 23, 2020, the current rate for a 30-year fixed-rate mortgage is 3.6% If the rate you locked in at is higher, you could stand to save quite a bit of money if you were to refinance.

Let’s illustrate how this could work. Using an example of a $250,000 mortgage with an interest rate of $4.89% on a 30-year fixed-rate mortgage, you would be paying $227,107 in interest over the entire loan term. If you locked in at today’s interest rate of 3.6%, you would be paying $159,180 in interest over the same loan term on the same loan amount. That’s a difference of $67,927.

As you can see, even a small difference in interest can mean huge savings. And considering how low today’s rates are, refinancing your Idaho mortgage might be worth considering.

The combination of increasing home price values and low interest rates makes today an ideal time to refinance your mortgage, which is why cash-out refinances are expected to continue to become increasingly popular among Idaho homeowners into 2020.

Related: Time The Market: When To Refinance And Lock A Rate

Is Now the Right Time For You to Consider a Cash-Out Refinance?

Idaho homeowners can use the money obtained through a cash-out refinance for many reasons, including the following:

Homeowners have many reasons to consider a cash-out refinance in Idaho. That said, it’s important for you to assess your situation to determine whether or not this program is right for you, especially in 2020. You’d be well-advised to consult with a mortgage specialist to help you make that important decision.

Curious About Cash-Out Refinancing in Idaho?

If you’re curious about cash-out refinancing and wondering if it’s right for you, Sammamish Mortgage can help. We are a local mortgage company based out of Bellevue, Washington that serves the entire state, as well as Oregon, Idao, and Colorado. Our mortgage financing professionals can work with you to help you determine if cash-out refinancing is right for you, or any of our other mortgage programs may be a better fit. Contact us today with any questions you have about refinancing in Idaho.