Recent reports indicate that homeowners could be sitting on quite a bit of equity right now.
According to the National Association of Realtors, the average homeowner in the U.S. saw price gains around $9,500 year over year. Having said that, home prices are not increasing at the rate they were in recent years.
The report goes on to state that the median single-family home jumped 3.9 percent to $254,800, up from $245,300 at the same time last year. This was the case for the majority of metro areas (86 percent).
On the west coast, in particular, homes sales saw a 2.8 percent increase when compared to the previous quarter, but sat at a nearly 11 percent decrease compared to last year.
So, what does all of this mean?
First, let’s define home equity. Home equity is how much the home is worth minus the balance owed on the owner’s home loan. Over time, as a homeowner pays down the loan, they obviously owe less on it. Meanwhile, if home values increase, that will boost the amount of equity that the homeowner has.
For Seattle/Renton/Tacoma homeowners, these current market trends could mean that it is a good time to pull out equity if they are looking to pay down debt, do a home remodel, take a vacation, or any other expense they need to take care of. There are various ways to pull out equity, including a home equity line of credit, cash-out refinance and home equity loan.
Keep in mind that most home equity loans come with a requirement to be repaid on a fixed-rate period.
These loans often are good alternatives to using credit cards for such purchases or other types of loans that could come with high interest rates. Also, keep in mind that the interest on these loans can be tax-deductible, which provides another benefit.
What this comes down is your home being an asset that gives you the ability to borrow against it. If you have any questions about this or anything else related to your mortgage, don’t hesitate to contact us today.