Summary: Mortgage interest rates have been hovering near historic lows for a long time, prompting many homeowners to consider refinancing their mortgages in Oregon to take advantage of lower rates and save on their home loans. Is this a rising trend in the state? And should you consider it for yourself?
Home prices are rising steadily in the state of Oregon, with the overall housing market rather warm right now. The average prices of homes in Oregon have risen 2.9% over the past 12 months and are expected to increase by another 3.2% over the next year. Considering this, homeowners in Oregon are finding themselves with a lot more equity in their homes simply from appreciation over time.
As such, an increasing number of homeowners in the state are considering cash-out refinances to tap into that home equity and convert it into usable cash. The funds can be used for any number of things, including home renovation projects that can further boost the value of their homes.
It’s anticipated that cash-out refinances will be a rising trend in Oregon through 2020, particularly as mortgage interest rates continue to remain extremely low relative to years past.
Here’s an updated look at cash-out refinancing and home-price trends in Oregon.
Cash-Out Refinance Loans in Oregon
What exactly is a “cash-out refinance” program? Essentially, this type of mortgage refinancing option involves taking out a new mortgage for a larger amount compared to the existing loan amount to convert home equity into liquid cash. The difference between the larger loan amount and what is still currently owed can be provided to homeowners in cash that can then be used to cover various expenditures.
Cash-out refinancing is an increasingly popular option for Oregon homeowners who have seen the value of their homes grow over the years thanks to home price appreciation.
To illustrate how a cash-out refinancing program works, let’s use the example of a homeowner who still has an outstanding home loan amount of $120,000 on a property that is currently valued at $300,000. The homeowner could refinance the current mortgage for more than the amount still owed ($120,000). If the homeowner wanted to take out $50,000 in cash from the home’s equity, they could refinance their mortgage for $170,000 (the $120,000 still owed plus the $50,000 they want to take out in cash).
This is a simplified explanation of how a cash-out refinance program works in Oregon, but there are several variations to the program that you can get more information from your trusted mortgage specialist.
Related: Cash Out Refinance After a New Purchase?
Take the Opportunity to Secure a Lower Interest Rate
Depending on when you took out your current mortgage, you may have locked in at a rate that is much higher than the going rates of today. As of this writing, during the week of January 16, 2020, the rate for a 30-year fixed-rate mortgage is 3.65%. Compare that to late 2018 when the peak rate was 4.94%. That’s more than a 1% difference, which can have a huge impact on how much you pay in interest for your mortgage throughout its term.
To show you how much of a difference that can make, let’s illustrate. A $400,000 mortgage at 4.94% on a 30-year fixed-rate term would come out to $2,120 per month in mortgage payments, and a total of $363,363 in interest alone over the 30 years. The same mortgage amount with today’s rate of 3.65% would come out to $1,823 per month in mortgage payments and a total of $256,515 in interest alone. That’s a difference of over $100,000 just in interest! As you can see, even a difference of 1% in interest can mean a high amount of savings.
Today’s lower rates might make now a great time to refinance your mortgage. If the rate that you locked in at is much higher than today’s rate, it might be worth considering. In fact, a lower interest rate is one of the more common reasons for refinancing.
If you need the funds to cover a large expense and have a sizeable amount of equity built up in your home, then a cash-out-refinance may be something to think about.
House values in Oregon have increased quite a bit in recent years. As mentioned earlier, the median home price across Oregon rose by 2.9% over the last year, according to real estate research firm Zillow. They’re also expected to rise even more over the next 12 months. As such, we may see more Oregon homeowners using cash-out refinance loans in 2020.
With higher property values in Oregon, homeowners across the state can enjoy more equity in their homes. Not only are home prices expected to continue rising in 2020, but mortgage rates are also expected to remain low throughout the year. If that’s the case, cash-out refinancing could become an increasing trend and comprise a bigger proportion of total refinance activity.
Is a Cash-Out Refinance Right For You?
- To secure a lower interest rate on the new mortgage
- To reduce the size of monthly mortgage payments
- To shorten the mortgage term
- To switch from an adjustable-rate mortgage to a fixed-rate mortgage
- To convert some equity into cash (for cash-out refinancing, specifically)
Considering all this, is refinancing the right option for you? Will this type of financing program help you reach your financial goals?
Have questions about refinancing?
If you’re curious about cash-out refinancing or other mortgage products, Sammamish Mortgage can help. We are a local, family-owned company based in Bellevue, Washington and serve the entire state, as well as the broader Pacific Northwest region in WA, OR CO, and ID. Our mortgage financing experts can look at your current equity and mortgage balance to determine if cash-out refinancing – or any of our other mortgage programs – is right for you. Get in touch with us with any questions you have about refinance loans in Oregon.
