US Home Equity Reaches Record Highs

Despite the pandemic and a slow economy, housing prices are continually rising.  As a result, many homeowners have benefited enormous home equity growth over the past several years.  According to Black Knight, the mortgage data firm, US homeowners have amassed over $9 trillion in usable equity during 2021, and the year isn’t over yet.  Another $1 trillion was added during the 2^nd quarter alone, by far the strongest growth we have witnessed in recent years.

Equity and Interest Rates

Consequently, this equates to roughly $173,000 in available equity for the average mortgage holder, an average $20,000 increase in the past 3 months.  During that time, interest rates were still hanging around the 3% mark.  So refinancing is equally as inexpensive now as well. The result has been an onslaught of cash-out refinancing loans.  In the 2^nd quarter alone, there were over 11 million cash-out refinancing loans made during that time, the fastest pace for any quarter in nearly 15 years.

So the question arises. Is it time for a cash-out refinance? With near record low interest rates and stockpiles of equity, this may be the perfect time to withdraw some cash for that bathroom or kitchen renovation or for some investment capital for your business idea.  Or maybe it’s the ideal time to get out from under that student loan debt.  A cash-out refinance could solve any of these issues.

Determine The Equity On The House

The first thing you need to do is determine the amount of equity you have.  Subtract what you still owe on your home from its current estimated value (this has more than likely increased since you bought the home).  In most cases, the lender will only allow you to cash-out only a portion of your home’s equity.  Most want you to have a minimum of 20% remaining after refinancing.  Just remember that you will have similar costs and fees as when you first bought your home.

Keep in mind that there may be situations where a cash-out refinance isn’t the best idea such as if the interest rate on your mortgage is lower than the current rates. James McBain of Liberty Capital Services quoted “Many Ohio homeowners capitalized on interest rates approaching 2.5 % towards the end of 2020.  So a cash-out refinance may not be a good idea in that situation. “ These are referred to as secondary loans that use your home’s equity, but have no effect on your primary mortgage’s interest rate.

Buy A Home in Columbus OH with Liberty Capital Services

We know that you may have questions or maybe looking for the best solution for your individual requirements. For more information about cash-out refinancing, call Liberty Capital Services today at (614) 505-0620 and speak with one of our representatives.