A growing number of homeowners are taking advantage of the equity in their property

As the housing market finally shows signs of continued cooling, home prices across the country remain at inflated highs as Americans sit on a record $27.8 trillion in equity, according to a new study. of LendingTree – an estimated $333,000 worth of equity for every owner-occupied housing unit in the nation.

While most homeowners probably don’t have as much value embedded in their properties, many are nonetheless tapping into the equity they’ve generated through home equity loans. To better understand how much money homeowners are looking to borrow against their equity, LendingTree analyzed more than 350,000 home equity loan offers to users of their online loan shopping platform from January 1 to July 20, 2022.

LendingTree found that the average size of a home equity loan offer is around $50,000 or more in all but one of the 50 states in the country.

Main conclusions:

  • The average home equity loan offer in the nation’s 50 states is $83,872. Average loan offers range from nearly $130,000 in Colorado to less than $31,000 in Iowa.
  • Homeowners in Colorado, Hawaii and Connecticut are offered the highest average home equity loans. In Colorado, home equity loan borrowers are approved for an average of $128,482. That is followed by $119,172 in Hawaii and $112,721 in Connecticut.
  • On average, borrowers in Iowa, Alabama and Nebraska receive the smallest home equity loan offers. In Iowa, the average amount of home equity loans offered is $30,904, making Hawkeye the only state where the average loan offered is worth less than $50,000. In Alabama and Nebraska, borrowers received average loan offers of $55,098 and $56,509, respectively.
  • The interest rates offered on home equity loans can vary widely from state to state. For example, the average rate of 8.47% offered to borrowers in Alaska, the highest in the country, is nearly 4 percentage points higher than the average rate of 4.55% offered in Maryland, the lowest in the country. .
  • Like rates and loan amounts, monthly home equity loan payments can vary from state to state. The highest average payment in the country is in Hawaii, where home equity loan offers would cost borrowers an average of $1,102 per month. On the other hand, the average home equity loan payment for Iowans would be just $284 per month, the lowest in the country.

States where homeowners are offered the largest home equity loans:

1. Colorado

  • Average amount of home equity loans offered: $128,482
  • Average home equity loan interest rate offered: 5.22%
  • Average monthly home equity loan payment offered: $552

2. Hawaii

  • Average amount of home equity loans offered: $119,172
  • Average home equity loan interest rate offered: 7.40%
  • Average monthly home equity loan payment offered: $1,102

3.Connecticut

  • Average amount of home equity loans offered: $112,721
  • Average home equity loan interest rate offered: 5.08%
  • Average monthly home equity loan payment offered: $460

States where homeowners are offered the smallest home equity loans:

1.Iowa

  • Average amount of home equity loans offered: $30,904
  • Average home equity loan interest rate offered: 7.23%
  • Average monthly home equity loan payment offered: $284

2.Alabama

  • Average amount of home equity loans offered: $55,098
  • Average home equity loan interest rate offered: 8.44%
  • Average monthly home equity loan payment offered: $564

3.Nebraska

  • Average amount of home equity loans offered: $56,509
  • Average home equity loan interest rate offered: 8.05%
  • Average monthly home equity loan payment offered: $556

Increased home equity is a tangible benefit of rising house pricesWhile it can be difficult to enter the real estate market when house prices are high, that does not mean that rising prices are bad news. In fact, rising prices may be a good thing for current owners.

For example, the record amount of home equity that homeowners are sitting on is likely the result of rising house prices since the pandemic began. Homeowners generate equity in their homes when the value of their property exceeds the value of their mortgage. In other words, if property values ​​increase significantly – as they have since the start of the pandemic – owners can generate significant equity in their property, even if they have not paid off a large amount. part of their mortgage.

The equity in a building can provide many benefits to owners. For example, tapping into home equity through a home equity loan or home equity line of credit can provide homeowners with access to cash that they can use at various purposes, from home renovations to paying off more expensive debt. Having equity can also be advantageous when it’s time to sell your home because the more a home is worth compared to what was paid for, the more money the seller will end up making.

While the rapid and prolonged growth in home prices since the start of the pandemic is a cause for concern that should be addressed, the high amounts of home equity that many Americans are sitting on due to recent growth prizes are nevertheless a positive element that deserves recognition.

To read the full report, including tips for leveraging your home equity, more charts and methodology, click here.

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