This is why the mortgage refinancing boom could continue in 2021 and beyond.



BUTAs mortgage rates fell in 2020, the mortgage industry has seen an unprecedented level of refinancing demand. Now that rates have been at historic lows for over a year, is this demand going to calm down? In that Fool Live video clip, written on June 14, contributor Matt Frankel, CFP and Industry focus Presenter Jason Moser discusses why the refinancing market may be in high demand in the near future.

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Matt Frankel: Many people think refinancing is running out. Like in 2020. You refinanced, I refinanced. I spoke with Anand Chokkavelu on another show, he refinanced twice last year. It’s not just about interest rates, you know, interest rates are about where they were last year when I refinanced. But if my houses are worth 20% more, I may be motivated to refinance again in order to withdraw some of this money. As you can see, a lot of people do because it’s a much cheaper way to pay for a large purchase than, say, putting it on a credit card.

Jason Moser: Of course of course. I mean, you can claim interest on taxes.

Frankel: I mean, a lot of people are doing what I do in South Carolina, building a backyard pool because it’s 150 degrees C in summer. The best way to do this is through loans through a pool of a company that I was looking at. The company I worked with offers financing at 8% per annum. Meanwhile, I can refinance my house at 3% cash, pay for something like that. This is simply the best way to make money or access your money. I think you will see a lot of refinancing and this will also improve the position of these banks as the demand for spending increases. Because the money they spend comes from somewhere. They can come from credit cards, savings, or cheaper sources of borrowing when people, as you mentioned, are very rich. Total home values ​​are up more than $ 1 trillion this year. People, there is a lot of wealth in their homes now that they did not have a year ago. You could see that there is a lot of demand for spending because of this. Don’t make the mistake of thinking people are wasting their incentive checks and that will be done soon.

Moser: It shows you the value of owning a home. Understandably, we always want to make sure you are spending within your means, but owning a home is a big responsibility, but it will certainly open up a lot of doors that wouldn’t otherwise open, and it’s just an important thing to keep. in the mind.

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