There’s a Record Amount of Cash Trapped in Your Home – Here’s How to Free it Up WITHOUT Losing Your Current Rate

Blog posted On May 09, 2024

Do you know how much money you’ve earned by paying your mortgage? Yes earned, not lost. When you own a home, you’re earning money with every mortgage payment. Over time, mortgage payments build up home equity – which is just a fancy term for how much of the home you own, in dollar amounts. Right now, homeowners are sitting on a record amount of equity: $16.9 trillion total and $11 trillion in tappable equity. Tappable equity is the amount of money you can take out of your home (without going below 20% equity). And according to Intercontinental Exchange (ICE), each homeowner has an average of $206,000 in tappable equity.

What would you do with an extra $206,000?

Having this much tappable equity means you have hundreds of thousands of dollars that at your disposal without needing to take out a personal loan. You can use it for anything:

  • Paying down high-interest debt like credit card debt
  • Financing home renovations or landscaping
  • Covering unexpected medical costs
  • Paying off student debt

How to access equity WITHOUT losing your current mortgage rate

Most homeowners either purchased or refinanced during the low-rate pandemic period, meaning they likely don’t want to replace it with a rate that’s roughly twice as high. Luckily, there are many ways you can turn your home equity into cash – and not all of them require you to refinance and replace your current mortgage with a new one (and new rate). By taking out a Home Equity Line of Credit (HELOC), you can keep your current rate/mortgage AND access your equity. The best of both worlds, right?

How a HELOC works

A home equity line of credit is a revolving source of funds like a credit card. But unlike a credit card, a HELOC is linked to your home equity. When you withdraw funds, it comes from your home equity rather than your bank account. Your untapped funds (in your home equity) do not charge interest. Another big difference between a HELOC and a credit card is interest rates. Credit card interest rates are generally way higher than HELOC rates.

“For existing homeowners, the picture keeps growing brighter”

  • Andy Walden, vice president of enterprise research strategy at ICE

 “Second-lien equity products [such as HELOCs] remain a particularly attractive option for tapping significant amounts of housing wealth without sacrificing a once-in-a-lifetime low rate on their existing mortgage,” Walden noted.

Reach out to learn more about our HELOC options!


Sources: HousingWire, MarketWatch