Over the past several years, the housing market in the U.S. has boomed. Homeowners have watched their home equity balloon as housing prices have soared. In many areas in the U.S., modest homes purchased as recently as seven years ago have doubled or tripled in value. During that same period, interest rates dipped dramatically, allowing a homeowner to obtain a mortgage refinance quote. In refinancing, homeowners lowered monthly payments and often withdrew a portion of their home equity - via home equity loans and home equity lines of credit - to make purchases or pay down consumer debt with higher interest rates. In a speech given in October 2004, Federal Reserve Chairman Alan Greenspan said, "Despite average annual mortgage debt growth in excess of 12 percent over the past two years, the financial obligations of homeowners have exhibited little change as a share of their income because mortgage rates have remained at historically low levels. The enormous wave of mortgage refinancing, which ended only in the fall of 2003, allowed homeowners both to take advantage of lower rates to reduce their monthly payments and, in many cases, to extract some of the built-up equity in their homes. In the aggregate, the cash flows associated with these two effects seem to have roughly offset each other, leaving the financial obligations ratio little changed." Greenspan continued, saying, "Indeed, the surge in cash-out mortgage refinancings likely improved rather than worsened the financial condition of the average homeowner. Some of the equity extracted through mortgage refinancing was used to pay down more-expensive, non-tax-deductible consumer debt or to make purchases that would otherwise have been financed by more-expensive and less tax-favored credit." According to the Federal Deposit Insurance Corporation (FDIC), historically low mortgage rates caused record numbers of homeowners to obtain a mortgage refinance quote and to sign on the dotted line to refinance their mortgages at lower rates. In a recent report, the FDIC said, "As mortgage rates bottomed out, refinancing volumes peaked in June 2003, but they have fallen sharply since then...Indeed, the Mortgage Bankers Association recently forecast that the dollar volume of refinancings would decline 57 percent in 2004 from a record $2.5

trillion in 2003." More homeowners are seeking a mortgage refinance quote to obtain a home equity line of credit (HELOC). According to the FDIC, these lines of credit have grown about 30 percent annually. The FDIC report states, "The rationale for homeowners' greater use of HELOCs is straightforward. With consumer spending outpacing income growth in the 2000s, homeowners have turned increasingly to home equity lending as a substitute for consumer credit to finance new consumption, reduce outstanding debt, or purchase a home in a two-loan package deal. The appeal over other more costly credit alternatives derives from the significant advantages of comparatively low interest rates, tax deductibility, and easy availability, since income and cash flow tests matter less for determining credit lines than for credit cards or auto loans.

Furthermore, because HELOCs offer the flexibility to draw money only as needed and the convenience of a revolving credit line, borrowers favor HELOCs more and more over closed-end home equity loans. For these reasons, many homeowners are converting the equity in their home into cash through home equity borrowing and making this kind of transaction an increasingly important part of their household finances. With the dramatic decline in mortgage refinancing volumes since mid-2003, a homeowner would more likely choose to tap home equity through a draw on a HELOC rather than extract cash as part of a refinancing." Obtaining a mortgage refinance quote is the first step in obtaining a home equity line of credit that homeowners can use for home improvement, debt consolidation, or consumer spending.

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