A short supply

of affordable homes and recent increases in home values have some owners looking to borrow against equity they have so they can renovate rather than move.

Interest-rate hikes have mortgage refinancing down — but not dead, Central Florida lenders say.

A short supply of affordable homes and recent increases in home values have some owners looking to borrow against the equity they have so they can renovate rather than move.

The trend has been a little surprising, lender Dan Spearman said, but cash-out refinances are more frequent that home-equity lines of credit. Cash-outs comprised 59 percent of refis in Metro Orlando as of April, according to financial website Lending Tree.

“When prices go up, sometimes people opt to remodel instead of buying to upgrade,” said Spearman, of Gulfstream Your Mortgage Source in South Daytona. “[Lines of credit] are out there, but not as prevalent as they once were. So people cash out with a refi.”

Even so, refinancing accounted for just 38.5 percent of all mortgage applications as of March, according to the Mortgage Bankers Association, the lowest level since September 2008. The overall drop in refinancing comes as rates have increased about three-eighths of a point to 4.38 percent during the past year, according to financial website Nerdwallet.

Some who refinance and stay put are adding rooms, expanding patios or upgrading kitchens and bathrooms, according to a release from Spectrum Global Financial.

Others use refinancing to pay off debt, said Grant Simon, branch manager at Fidelity Bank and a former mortgage broker. That’s possible because home values have increased during the past five years, he said.

Credit card balances, installment loans and student loans are among the kinds of debt being addressed by refinancing a mortgage, according to Spectrum Global Financial. Some homeowners also are refinancing before they move into new homes, either to make the down payment on the new house or to convert the current home into a rental property after they move, Spectrum said.

“When prices go up, sometimes people opt to remodel instead of buying to upgrade. [Lines of credit] are out there, but not as prevalent as they once were.” Lender Dan Spearman, Gulfstream Your Mortgage Source

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