Rising home prices have been in the news most of this year and much of the focus has been on whether home prices are accelerating too quickly, as well as how sustainable the growth in prices really is. One of the often-overlooked benefits of rising prices, however, is the impact that they have on a homeowner’s equity position.
Home equity is the difference between the home’s fair market value and the outstanding balance of all liens (loans) on the property. While homeowners pay down their mortgages, the amount of equity in their homes climbs each time the value of their homes go up!
According to the latest Equity Report from ATTOM Data Solutions, “13.9 million U.S. properties in Q2 2018 were equity rich — where the combined estimated balance of loans secured by the property was 50 percent or less of the property’s estimated market value — representing 24.9% of all U.S. properties with a mortgage.”
This means nearly a quarter of Americans who have a mortgage would be able to sell their homes and have a significant down payment toward their next home. Or perhaps, refinancing your current mortgage to get rid of Private Mortgage Insurance payments, reducing the term of your loan down to a 15 or 20 year mortgage and getting some cash out to pay down high interest rate credit cards or car loans. You also may want to do some remodeling and get a little "mad" money for a special vacation.
If you are a homeowner looking to take advantage of your home equity, let’s get together to discuss your options!