{"id":19082,"date":"2021-06-30T11:48:05","date_gmt":"2021-06-30T11:48:05","guid":{"rendered":"http:\/\/www.anthonydidonato.net\/wordpress\/?p=19082"},"modified":"2021-06-30T11:48:05","modified_gmt":"2021-06-30T11:48:05","slug":"fannie-chair-cautions-owners-not-to-take-out-too-much-equity","status":"publish","type":"post","link":"https:\/\/www.anthonydidonato.net\/wordpress\/fannie-chair-cautions-owners-not-to-take-out-too-much-equity\/","title":{"rendered":"Fannie Chair Cautions Owners Not to Take Out Too Much Equity"},"content":{"rendered":"

Fannie Chair Cautions Owners Not to Take Out Too Much Equity<\/h1>\n
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Home prices have posted double-digit annual gains and homeowners are feeling richer. Those higher prices are also driving an uptick in cash-out refinancing, in which owners are taking out some of the home equity by refinancing.<\/p>\n

In 2020, about $185 billion of equity was taken out through cash-out refinances\u2014the highest amount since 2007, according to Fannie Mae and Freddie Mac.<\/p>\n

But Fannie Mae\u2019s board of directors chair Sheila Bair warns in a new column at Yahoo! Money that homeowners need to be careful about using cash-out refinances and taking out too much of their home\u2019s equity.<\/p>\n

\u201cIn many cases, a cash-out refinance makes sense, allowing a family to cover a medical emergency or a longer-term investment such as college tuition or a home renovation,\u201d Bair writes. \u201cBut cash-out refinances can also carry risks that every homeowner\u2014and every lender\u2014should consider, especially during times of rapid home price increases such as now.\u201d<\/p>\n

After all, home prices can\u2019t rise indefinitely and there\u2019s always a risk with cash-out refinances that home values could fall below the loan\u2019s value.<\/p>\n

Stricter lending standards today than preceding the Great Recession are making it more difficult for some homeowners to transact a cash-out refinance. For example, Fannie Mae now requires that cash-out refinance loans be no greater than 80% of the home\u2019s value and at least six months of verified reserves for homeowners whose monthly debt payments are 45% or more of their monthly incomes.<\/p>\n

Lenders and homeowners are being more cautious: 36% of 2020 cash-out refinances resulted in a mortgage balance at least 5% greater than the previous balance. From 2005 to 2008, that comprised 78% of refinances.<\/p>\n

\u201cThe overall picture of today\u2019s cash-out refinance market is one calling for caution, but not alarm,\u201d Bair notes.<\/p>\n

Bair urges any homeowners considering a cash-out refinance to recognize the importance of not missing any payments\u2014a missed monthly payment on a cash-out refinance loan could cost them their home\u2014and to be aware that refinancing still costs money. Closing costs could make up 2% to\u00a05% of the loan amount. Also, Fannie Mae and Freddie Mac will not back a cash-out refinance loan with less than 20% equity.<\/p>\n

\u201cHomeownership can be one of the most effective ways of building wealth,\u201d Bair writes for Yahoo! Money. \u201cHowever, entering into a long-term mortgage and building equity requires care and diligence.\u201d<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Source:<\/div>\n
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\u201cTempted to Turn Your Home\u2019s Soaring Equity Into Cash? Don\u2019t Do it Lightly: Fannie Mae Chair<\/a>,\u201d Yahoo! Money (June 26, 2021)<\/div>\n
\u00a9National Association of REALTORS\u00ae
\nReprinted with permission<\/span><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Fannie Chair Cautions Owners Not to Take Out Too Much Equity Home prices have posted double-digit annual gains and homeowners are feeling richer. Those higher prices are also driving an uptick in cash-out refinancing, in which owners are taking out some of the home equity by refinancing. In 2020, about $185 billion of equity was … <\/p>\n

Continue reading<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,8],"tags":[5,32,4,9],"class_list":["post-19082","post","type-post","status-publish","format-standard","hentry","category-news","category-real-estate-tips","tag-anthony-didonato","tag-news","tag-real-estate","tag-tips","item-wrap"],"yoast_head":"\nFannie Chair Cautions Owners Not to Take Out Too Much Equity - Real Estate Agent and Sales in PA - Anthony DiDonato Broomall, Media, Delaware County and surrounding areas in Pennsylvania<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.anthonydidonato.net\/wordpress\/fannie-chair-cautions-owners-not-to-take-out-too-much-equity\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/fannie-chair-cautions-owners-not-to-take-out-too-much-equity\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/fannie-chair-cautions-owners-not-to-take-out-too-much-equity\\\/\"},\"author\":{\"name\":\"admin\",\"@id\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/#\\\/schema\\\/person\\\/964792b6994e8cc4cbddc36ad4824908\"},\"headline\":\"Fannie Chair Cautions Owners Not to Take Out Too Much Equity\",\"datePublished\":\"2021-06-30T11:48:05+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/fannie-chair-cautions-owners-not-to-take-out-too-much-equity\\\/\"},\"wordCount\":436,\"publisher\":{\"@id\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/#\\\/schema\\\/person\\\/964792b6994e8cc4cbddc36ad4824908\"},\"keywords\":[\"Anthony DiDonato\",\"News\",\"Real Estate\",\"tips\"],\"articleSection\":[\"News\",\"Real Estate Tips\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/fannie-chair-cautions-owners-not-to-take-out-too-much-equity\\\/\",\"url\":\"https:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/fannie-chair-cautions-owners-not-to-take-out-too-much-equity\\\/\",\"name\":\"Fannie Chair Cautions Owners Not to Take Out Too Much Equity - 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