lowrate.com

Borrowers are finding that their mortgage is the most solid investment they can make in today’s economy and are choosing to put more of their cash into their home loan.

Attracted by record-low mortgage rates, some borrowers are taking money that they might otherwise invest in the stock market and instead using it to pay down mortgage debt when they refinance their home, reported MarketWatch. The move could cut their loan term significantly and make monthly payments more bearable, said the report.

By providing cash at refinancing and knocking down the total loan amount, a borrower might be able to downgrade a more expensive loan from jumbo to conforming status, thus further cutting the interest rate. Or a borrower might lower their mortgage to less than 80 percent of their home value, allowing them to forgo paying private mortgage insurance every month. If a homeowner is able to reduce their loan-to-value ratio to under 60 percent, they’ll be able to catch the lowest possible refinancing rates, as long as they have a credit score of at least 740, said the report.

Refinancing activity is on the rise, making up about 79.4 percent of all mortgage activity, reported the Mortgage Bankers Association.

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