Cha-ching! More homeowners cashing out their refi...

Cha-ching! More homeowners cashing out their refis
Eighty percent of Freddie Mac loans that were refinanced in the fourth quarter of 2005 resulted in new mortgages with loan amounts that were at least 5 percent higher than the original mortgage balances, the mortgage giant said in a report today.
"We see from the cash-out analysis that the overwhelming majority of these borrowers were extracting home equity rather than trying to reduce their monthly payments," said Frank Nothaft, Freddie Mac chief economist. The company estimates that home equity extraction from refinancing prime mortgages will total about $243 billion for 2005, then fall sharply to about $117 billion in 2006 as home price growth and refinance activity slows.We must be in the debt generation for sure. Isn't the point to lower your monthly costs and pay down the mortgage? Will there be any fallout down the road from this?

[via Inman Blog]