Cash-Out Refinances got a very bad look ever since the 2008 Financial Crisis. Millions of Americans were enjoying the "equity" they once had right before the bubble bursted in 2008. As we are seeing right now in 2021 home prices have skyrocketed with an average of 15.4% growth in just the last year per (Realtor . com).
According to WallStreetJournal in 2008 about 90% of homeowners who did a refinance also did a cash-out. This was devastating for millions of Americans who saw the housing market crash. Homeowners ended up going underwater owing the banks more then what the house was worth.
In 2020 WSJ states that we are seeing 1/3 of homeowners who are doing Refinances are also taking cash-outs. Now this number may sound a lot less then 2008 which it is, but it's still a HIGH percentage of homeowners. That is almost 33% of the entire refinancing market. What happens when homeowners maximized their debt with keeping only 3% down? What happens when house prices retrace 10%, 20% or even 30%?
Many believe we are in a housing bubble where prices are just outrageous. Many economists predict a housing crash while other economics say house prices will keep going up. This market is uncertain and Millions can be effected if not properly prepared.
We have mortgage forbearance programs, foreclosure moratoriums, eviction moratoriums, stimulus packages, stimulus checks and so much more being fed into the markets. This is causing delays to a negative reaction by the economy.
Whether we are in a housing crisis, housing crash, foreclosure crisis, eviction crisis, housing bubble, real estate market crash or whatever you want to name it, the most important thing is to STAY EDUCATED.
Anyways, enjoy the video and comment below your thoughts so we can discuss!
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