Mortgage billionaire says refinance opportunities on the rise as home prices surge to 40-year high

Home values are on the rise, reaching their highest level since the 1970s, new housing data shows. 

The national home price increase of 17.2% is significantly higher than what's expected for next year, according to the CoreLogic Home Price Index report. Home price gains are projected to slow to a 3.2% increase by June 2022, the report said.

"Home prices have been rising in the mid-single digits for some years now," CoreLogic President and CEO Frank Martell said. "The recent surge to double-digit price jumps reflects the convergence of exceptional demand and persistent low supply. With plenty of cash on the sidelines, along with very low mortgage rates, prices are heading up and affordability will become a more acute issue for the foreseeable future."

Homeowners can take advantage of these rising home prices and pull money from their home’s equity through a cash-out refinance. Visit Credible to find your personal interest rate and pull cash out of your home to pay for home improvement projects or pay off high-interest debt. 

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Mortgage billionaire: why now is a good time to refinance

Mat Ishbia, the president and CEO of United Wholesale Mortgage (UWM), said there are three reasons homeowners should refinance their mortgage now: to get a lower rate, to pull cash out of their home or to remove their mortgage insurance because they have more home equity. 

"You'll get someone telling me, ‘No they're not, interest rates are not at all-time lows. They were lower in July or August last year.’ But that's not reality because the primary and secondary spreads were wider back then, which means the consumer was not getting as low rates," Ishbia said. "Right now, today, consumers get a lower rate than they ever got in 2020."

And some mortgage lenders are encouraging homeowners to refinance now, saying the lack of inventory could benefit those looking to refinance as there are fewer homebuyers looking for mortgages. 

"While real estate always has its highs and lows, we’ve never seen such a hot market like what we have seen recently," Rock Mortgage Senior Partner Eduardo Adame said in a statement. "Basically, inventory is down, and buyers are experiencing fatigue and giving up trying to purchase a property. This is great news for homeowners wanting to refinance their properties because rates are extremely low. Now is definitely the time to re-examine your mortgage and potentially reduce your monthly payment."

If you are interested in seeing how much you could save by refinancing your mortgage loan, visit an online marketplace like Credible to compare multiple lenders at once and get prequalified for a new mortgage without affecting your credit score.

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Top reasons to refinance your mortgage

Given the state of the current housing market, now is a good time for homeowners to save money through a mortgage refinance, Ishbia said. Here are a few reasons why:

No refinance fee: The Federal Housing Finance Agency (FHFA) recently removed its adverse market fee, enabling homeowners to save an average of $1,400 in closing costs or save even more on their monthly payment with the fee removed. The fee was instated during the heart of the pandemic and was added to all mortgage refinances for loans backed by Fannie Mae and Freddie Mac. But the Biden administration removed the fee in August 2021. 

"What does this mean? It means better rates or lower fees for consumers across the country," Ishbia said. "It’s a very positive view by all originators along with all consumers because everyone is saving money."

Mortgage rates are low: Mortgage rates are at historic lows, and the latest Freddie Mac report shows the average 30-year fixed-rate mortgage dropped to 2.77%. You can use Credible’s mortgage calculator to estimate how much you could save on your monthly payment by getting a lower interest rate.

Increase in cash-out opportunities: Home prices are rising, growing at a record pace from last year, according to CoreLogic. This presents more opportunities for homeowners to tap into their equity through a cash-out refinance, according to Ishbia. The increase in equity could also allow some homeowners to remove their private mortgage insurance (PMI).

"It means a lot of borrowers have a lot more equity in their house than you thought," Ishbia said. "Even borrowers that got refinances or bought a house during COVID might still have equity in their house and they can take advantage. But for sure, those that have been in their mortgage since before that."

If you're trying to decide if refinancing your mortgage is right for you, contact Credible to speak to a home loan expert and get all of your questions answered. On Credible, you can compare loan options to see if you can lower your monthly mortgage payment.

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