According to information released by government-controlled Freddie Mac this week, cash-out refi’s hit an all-time low in the fourth quarter of 2010 as only 16 percent of homeowners refinancing opted to cash in on their equity. Nearly half of all refinancing homeowners (46%) decided to do a “cash-in” refi, meaning that they lowered their principal balance at closing by paying additional money in[1]. During the third quarter of 2010, 35 percent of all refinancing homeowners opted for cash-in refi’s.

Frank Nothaft, vice president of Freddie Mac and the GSEs chief economist, credits record-low 30-year fixed rates in 2010 with encouraging “borrowers who could do so to finance.” He believes that at the time, other investment options probably made paying down a mortgage look like a good idea. Given that getting a home loan or qualifying for refinancing has gotten harder in recent years and, with current legislation in the works is likely to get even harder, homeowners are likely acting now to solidify their home loans and the status of their mortgage.

This week, refinance rates jumped 3 points to 5.012 percent and all major lenders raised their refinancing rates[2]. Are you looking to refinance before restrictions on credit and lending get even tougher?

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[1] http://nationalmortgageprofessional.com/news23397/freddie-mac-study-finds-share-refinancers-taking-out-cash-hits-record-low

[2] http://www.digitalnewsreport.com/2011/02/01-refinancing-loan-rate/7343