“It’s all about the prime rate,” said Michael Kodsi, chief executive of Choice Mortgage Bank in Boca Raton, Fla. A good number of his clients would rather take cash out through refinancing — whereby their mortgage rate will be fixed — than take out a loan tied to the prime rate, which has the potential to fluctuate and “could go higher down the road,” he said. Freddie Mac said 89 percent of the loans it owns that were refinanced in the third quarter of 2006 had loan amounts at least 5 percent higher than the original mortgage balances, the threshold for considering a loan to be a cash-out refinancing. It’s the highest share of cash-out refinance loans reported since 1990. (more…)
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