You've seen the headlines. Rates continue to stay on the move. And more homeowners are turning to Home Equity Lines of Credit (HELOCs) as their go-to strategy to access the cash they need from their home's equity. Why?
1. Home Values are at record highs in many neighborhoods
According to CNBC.com, “Total housing wealth grew by $8.2 trillion between 2010 and 2020, according to a March report from the National Association of Realtors.” With all of this additional home value, homeowners have more equity to tap if needed for debt consolidation, home improvement or anything else.
Curious to see how much cash you could access from your home? Take 15 seconds to see with our Cash Calculator.
2. Mortgage rates continue to rise
With rates continuing to rise from the record lows during the pandemic, many homeowners with low first mortgage rates don’t want to access their home’s equity via a cash-out refinance. According to CNBC.com, It can also be expensive to refinance, as there are extra closing fees involved.
3. HELOCs let you access home equity cash without touching your low first mortgage rate
Home equity lines of credit, or HELOCs, serve as a revolving line of credit similar to a credit card, but with some very big differences. A HELOC is typically taken out in addition to your existing first mortgage, and lets you borrow against your available home equity with your property as collateral.
As a result, a HELOC is considered a second mortgage and has its own term and repayment schedule, completely separate from your first mortgage. On CNBC.com, Thomas Blackburn (CFP with Mason & Associates) said: “You have a pool of money you can draw on, and it doesn’t cost anything unless you use it…It’s almost like insurance.”
Also on CNBC.com, Dennis Nolte of Seacoast Bank said, “You can’t eat your equity, but if you can monetize some of it to reduce debt and make life easier from a cash flow perspective, that makes a ton of sense in most situations.”
To see how much cash is available from your home, take 15 seconds to visit our Cash Calculator and see your results. To pay off high-interest debt. For home improvement. Or anything else. You may be surprised just home much cash you could access from your home.