There are two basic reasons for a residential refinance: to lower your rate and possibly term, or to take cash out. With rates as low as they are, most are refinancing in order to lower their rate and payment. Cash out refinancing has not been removed from the range, however. But it is on a slow simmer, with 49% of homeowners who refinanced during the last quarter of 2011 bringing cash to the table compared with the 37% who took out new loans of size similar to the previous ones. This has, in turn, reduced the amount of the new loan to a median ratio of 74% of the old loan.

Compare this with the height of the housing boom, when, for eight consecutive quarters from 2005 to 2007, cash-out loans comprised more than 80% of all refinancing. Homeowners reducing their mortgages were rare indeed; no more than 8% did so in any of those quarters.

Interest rates have changed as well such that borrowers who refinanced in 2011 achieved new interest rate averaging 1.4% below their old mortgages, an improvement of 26%. This translates to a substantial annual savings of a median $2,700 in the first year of a $200,000 loan. And you can pretty much double that loan amount for many of the loans that Landmark does.

What sort of homeowners were cash-out refinancing last year? Freddie Mac analysis shows that the cash out borrowers who refinanced in the fourth quarter were distinguished by the fact that they owned homes that had held their value better than the average home, though this could also be attributed to value-enhancing improvements. Our advisors are seeing this as well – be sure to give us a call to compare your existing rate versus where they are now – you might be pleasantly surprised.