Townstone Financial

The consumer price index (CPI) rose 3% in June 2024 compared to the 9.1% pandemic-era peak in 2022. We are nearing the Federal Reserve’s target of 2%, so what comes next? After years of waiting, this is the best sign yet that the Fed will enact a rate cut in September with the possibility of further cuts as we head into 2025. We continue to see lots of purchase activity as inventory increases, but let’s talk about home equity products for a moment. Two big misconceptions we’re seeing right now: 1. Can you refinance your 1st mortgage after opening a home equity line or loan? Yes. It simply requires what is called a “resubordination” where the 2nd mortgage holder agrees to remain in 2nd lien position. What you can’t do is a cash-out refinance of a 1st mortgage without paying off the 2nd mortgage because then it weakens their 2nd lien position. 2. Will you lose your home if you default on your home equity line or loan? While you can theoretically be foreclosed on if you default on the 2nd mortgage, it’s nearly u