What is a “cash-in” refinance?

Until recently I had never heard the term “cash-in” refinance nor would I have known what it meant.  Intuitively it’s not too difficult to figure out.  If a cash-out refinance is a refinance transaction where a homeowner borrows more than their existing loan balance to realize cash in their pocket then a cash-in refinance is the opposite. Instead of increasing their loan balance they actually bring cash into the transaction to pay down the mortgage balance.

Freddie Mac released this report at the end of January stating that of all the refinance transactions done in the 4th quarter of 2010 46% involved some level of cash-in on the part of the homeowner which is the highest percentage on record.  During the height of the mortgage debt bubble cash-in refinances only comprised of 4% of all refinancing.  This trend follows a larger pattern across the economy of deleveraging which I had been blogging about frequently back in 2009.