Freddie Mac has released its quarterly refinancing report and it is outlined in an article on MSN MarketWatch. The report indicates that cash-out refinancings are in fact on the upswing, having reached $8 billion in the cash out refinancing of conventional mortgages for the third quarter. At their peak in the second quarter of 2006, cash out refinancings totalled $84 billion. While we have a long way to go to reach that level again, cash out refinancings did increase by about $2 billion from the second quarter to the third quarter according to the report.
The report indicates that the increase in home equity along with equivalent or slightly lower interest rates are the contributing factors that are leading the way. People are increasing their cash flow on a monthly basis by using their equity in their homes to pay off higher interest rate credit cards. Others are using the supply of cash to remodel and update their homes.
The refinancing market is not dead for mortgage lenders and is in fact coming back although very slowly as home equity increases at a slow pace. People find that a 
cash out refinancing of a conventional first mortgage is more appealling than taking out a HELOC as HELOCs generally have variable interest rates while conventional first mortgage interest rates are still in the 4% range, fixed, give or take a few tenths of a point.
Freddie Mac also reported that more borrowers are making additional payments on their mortgages. And of those refinancing, more people are taking out shorter term loans than previously.
From a personal stand point, we have been paying an additional amount each month for several years and the balance is starting to decrease more than I anticipated. We have contemplated trading our 30 year loan for a 15 year loan, but we are happy to keep the longer term mortgage and work together to make sure that we make additional payments every month. That allows us to control the situation a bit more than being locked into a higher payment with a 15 year loan. If there is an emergency or other unexpected financial circumstance in a given month we can alter the timing or amount of the additional payment while the regular required payment is always in on the first of the month. That allows us to avoid hitting our savings which we both know might not be replaced as quickly as it should if we do need additional funds for a short period. I sure all of you who work for commissions only know about managing cash flow.
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