You've heard of the refi boom. Now get ready for the refi ripple.

Lenders nationwide are reporting a significant late-summer mortgage refinancing revival — a 21% surge in applications in mid-August alone, according to the Mortgage Bankers Assn. of America. While most of the applicants appear simply to be taking advantage of the nearly half-percentage-point downward flutter in interest rates over the last several weeks, a sizable minority are "cashing out" — converting their inflation-fed equities into spendable dollars through larger first mortgages.

Roughly two of five refinancers are in the cash-out category, according to the latest survey data compiled by mortgage investor Freddie Mac. But among certain lenders who specialize in refinancings — notably online giant Ditech.com, a General Motors subsidiary — the current proportion of cash-outs borders on 70%.

You might scratch your head and wonder: Hasn't every homeowner who could have refinanced already done it one, two, three times or more during the last 48 months? Will the last homeowner in America who hasn't already refinanced please turn out the lights?

Well, yes and no. Freddie Mac deputy chief economist Amy Crews Cutts said "there are still significant numbers of people out there" for whom refinancing might make sense. Roughly one in six American homeowners has a mortgage with a note rate between 7% and 9%, according to Cutts. Another 33% have rates between 6% and 7%. One percent of all homeowners are still paying rates in excess of 9%.

With fixed-rate, 30-year quotes of 5.5% to 5.75% with zero or minimal points at the largest lenders, refinancing is still a good option for vast numbers of consumers. Ralph Hall, chief operating officer of GMAC Mortgage, said a large percentage of recent refi ripple applicants are people who bought newly constructed homes during the last year and signed up for fixed-rate loans in the mid-6% range, possibly through their builders' financing subsidiaries.

Refinancing is a no-brainer for these homeowners, said Hall. Not only does a new 5.5% mortgage save them money every month, but "they are likely to be able to spread out the costs of refinancing over the longer term because they plan to remain in their homes." Those costs typically include appraisals, new title insurance policies and the usual grab bag of settlement and escrow fees.

Another key category of refi ripple applicants appears to be homeowners who have an immediate need for a large chunk of cash, and who view their home as their most consumer-friendly source. Though equity lines of credit are more popular than ever, many owners find the cost of money lower — and interest charges more predictable — in the fixed-rate 30-year market.

Say you need $40,000 to make a down payment on a vacation home or to invest in your business. By refinancing your existing mortgage and taking out an additional $40,000, fully secured by your equity in the house, you can obtain the money you need at nearly historically low costs in the 5.5% to 6% range, depending on your credit profile.

The easiest slam-dunks in the current refi environment, however, are zero-cost deals. Widely available from lenders and through brokers, they involve a relatively simple concept: Rather than paying for your origination and settlement charges at settlement, you finance them by including them in the interest rate on the new note. Of course, zero-cost refinancings are not literally zero cost. Like all loan transactions, they come with fees. You just don't pay for them upfront. Instead you pay for them month by month in the form of a slightly higher interest rate than you would otherwise be charged.

Say you have a $250,000, 30-year, fixed-rate mortgage at 6.5%. Your current monthly principal and interest payments are $1,580.18. A lender or broker in today's market might be able to offer you a zero-cost refi at 6% with principal and interest payment of $1,498.88 — an $81.30 per month saving, or nearly $1,000 a year. The 6% rate might be one-quarter of a percentage point higher than the 5.5% or 5.75% rate the lender could offer you in a traditional refi transaction, where you pay all origination and settlement fees upfront.

But ask yourself: Is there some good reason not to save a thousand bucks a year? Why not refi if there's no out-of-pocket expense?

That's apparently what many ripple refinancers are figuring — even if it's their fourth new mortgage since the late 1990s.

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