Record rebound in home equity gives owners new options
Source: The LA Times
In what amounts to a record rebound for a 12-month period, homeowners’ net equity holdings soared $2.2 trillion from the third quarter of 2012 to the third quarter of this year. This turnaround has provided some much-needed relief to the personal finances of hundreds of thousands of owners, who for years have been underwater on their mortgages. With increased equity, homeowners now have more options at their disposal.
Making sense of the story
- With these improved conditions, homeowners are able to borrow against their equity to help pay for college tuition, home improvements, and other items. They also may be able to refinance their mortgages without having to use a government-aided program.
- Equity is typically improved in the following ways: Reduced debt from making payments to your lender, improved market conditions that increase the value of your home, or upgrades that raise the home’s sales value.
- If your house is worth $300,000 and you owe the bank $150,000 — whether from a single mortgage or multiple loans — you have $150,000 in equity.
- CoreLogic estimates that 791,000 homes moved from negative to positive equity status during the third quarter of this year alone, and more than 3 million have done so since the beginning of 2013.
- According to the CoreLogic’s study, 92 percent of all mortgaged homes in the country valued at more than $200,000 have positive equity, while just 82 percent of homes valued at or below $200,000 have positive equity.
- Values have roared back in the last two years in California, as now the state has just a 13 percent negative equity rate. This is significantly lower than Ohio (18 percent), Michigan and Illinois (both 17.7 percent), Rhode Island (16.6 percent) and Maryland (15.6 percent).