Sitting on a Gold Mine?
Are millions of homeowners sitting on much bigger equity nest eggs than they think? Do you know how much equity you’ve got? If not, could you be missing opportunities to tap into it for worthwhile projects at close to all-time low interest rates? Academic and financial industry research suggests that large numbers of Americans don’t keep track of their equity and don’t really know how they could use it. That’s curious because home equity has almost never been higher or easier to access. The Federal Reserve estimates that, thanks to rising prices and principal paydowns, total home equity surpassed $13 trillion in the first quarter of this year, more than double what it was in 2011.
Black Knight Financial Services estimates that $4.4 trillion of equity is immediately “tappable,” that is, owners can withdraw funds via equity credit lines, equity loans and cash-out refinancing, and still retain a healthy equity cushion in their homes. Equity is the difference between the market value of your home and the total debt you’ve got against it. A $350,000 house with $175,000 in debt has equity of $175,000, a 50 percent equity position. Thirty-eight million owners nationwide have at least 20 percent equity, averaging $116,000 per owner, according to Black Knight. Many lenders will allow owners to tap into that equity to the extent that their total debt does not exceed 80 percent of the home’s appraised value. But before any of that happens you need to know the basics about equity, starting with how much you’ve got.
Source: Ken Harney, The Nations’ Housing
Would you like to know what means are available to ball-park your equity without a formal appraisal? Contact us.