【Freddie Mac】Refinance Trends in the First Quarter of 2020

American homeowners have many options when it comes to mortgage financing. Most homeowners with a mortgage opt for a fully pre-payable 30-year fixed rate mortgage. The fixed rate locks in a fixed payment for the life of the loan, while the 30-year term lowers the required monthly payment. Locking in a fixed rate protects American homeowners from the risk of an increase in mortgage interest rates and the higher payments that would come with it under an adjustable rate mortgage. The fully pre-payable feature of home mortgages gives American homeowners the added flexibility of refinancing their mortgage should interest rates fall. American homeowners can also refinance their mortgage to extract home equity via a cash-out refinance. As we noted in a previous report, American homeowners who extract equity typically use the funds to pay off other debts (credit cards, student loans) or to finance home improvement projects.

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