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Advantage Home Equity

Using Home Equity to Your Advantage

What rate of return is the bank paying you for the equity in your home? Zip Zero Zilch! Use the equity to pay off high interest credit cards ...

Rising mortgage rates keep home equity line of credit usage down

A driving factor behind the decline in usage of equity in the form of home equity lines of credit is "likely the increasing spread between first-lien mortgage interest rates — which are tied most closely to 10-year Treasury yields — and those of HELOCs — which are more closely tied to the federal funds rate," Ben Graboske, executive vice president of Black Knight's data and analytics division, said in a press release.

"As of late last year, the difference between a HELOC rate and a first-lien rate had widened to 1.5%, the widest spread we've seen since we began comparing the two rates 10 years ago. The distance between the two has closed somewhat in Q2 as 30-year mortgage rates have been on the rise, which does suggest the market remains ripe for relatively low-risk HELOC lending expansion," Graboske said.

Growth in interest rates, though down historically, still influenced homeowner borrowing decisions in the first quarter, and will likely further increase the standard interest rate in the third quarter as the Federal Reserve raised its target interest rate at its June meeting, according to Graboske.

Home equity is growing, but homeowners refuse to tap into it

With home prices continuing to rise, homeowners are becoming increasingly “equity rich”. But that hasn’t tempted many to take advantage of the situation, as the number of home equity lines of credit stays flat.

Consumers tapped an average of just 1.17 percent of the equity held in their homes in the first quarter of this year, which is the lowest amount in almost four years, said mortgage software and analytics company Black Knight.

The company says that it could be that many homeowners don’t realize how rich in equity they are.

“I think the typical American doesn’t have that level of awareness; they’re not probably studying the numbers,” Ben Graboske, executive vice president of Black Knight’s Data & Analytics division, told CNBC.

CNBC’s report notes that the amount of tappable equity has risen by seven percent in the first quarter of this year alone, according to Black Knight’s figures. That’s the largest single quarter increase since Black Knight began tracking such data 13 years ago. Altogether, collective equity has increased by 16.5 percent in the last year. In total, homeowners have a collective $5.8 trillion in tappable equity, Black Knight said, noting that this is 16 percent higher than the previous peak in 2006. the average homeowner with a mortgage has seen their tappable equity increase by $14,700 in the last 12 months and can draw $113,900 if they wish.

Any advantage between joint and single home equity lines?

Me and my wife are thinking about it, but not sure if to go with joint or single? What are pros and cons?


TAGS: Mortgages, Home Loan, Bank, Banking, Finance.


It's an equity line. It HAS to be titled at least in the same manner as the house. If the house is a joint ownership then so WILL the loan. They will demand all owners pledge to the loan.