Tapping Into Your Home’s Equity

Many homeowners are tapping into their home’s equity. Here’s why.

Do you notice that pile of cash you're sitting on right now? 

I'm not joking. 42 million homeowners with mortgages have equity in their home right now.

When added up, tappable home equity recently reached $5.5 trillion. That's about $3 trillion more than when the housing market bottomed out in 2012. "Tappable equity" here is defined as the amount a homeowner could borrow before they hit 80% of debt to value.

Not surprisingly, many homeowners are looking to tap into these hidden reserves. As just one sign of this, mortgage applications are up 4.1% this January over last year. That's mostly been driven by mortgage refinances, as homeowners are looking to take advantage of low (but increasing) rates to take out some of that equity as cash.

Another option to a mortgage refinance is a home equity line of credit (HELOC), a kind of checking account on your home. While HELOCs have been growing in popularity, they've hit a slight snag recently because the new tax bill eliminates the deductions for interest paid on such lines of credit. 

Many homeowners are tapping into their equity now.

What are homeowners who tap into their equity actually doing with the extra cash? Most people are spending it on making their homes even more valuable. According to one survey, 80% of borrowers would consider using that cash to renovate their home. 

However, other homeowners are using their home equity to cover education expenses, to pay down other debt, or simply for investing, whether in stocks, real estate, or even cryptocurrencies.

So should you tap into your home equity?


I can't say either yes or no. It’s something you’ll have to decide on your own. However, if you have any questions or would like us to take a look at your specific situation to see what your best move is, we would be glad to help. Don’t hesitate to give me a call or send me an email any time. 

3 Ways to Winterproof Your Home

Here are three ways to winterize your home. Making these improvements will save you money and add value to the home.

Winterizing your home can pay for itself and then some. It can help you save money on costly repairs. The right project could save you money directly in the form of lower utility bills. The right winterization project could significantly increase the resale value of your home.

But here's the thing: Not all winterization projects are equally valuable. That's why I've collected the top three projects that stand out in terms of the return they will give on your investment.

1. Fiberglass attic insulation. Each year, Remodeling Magazine releases its Cost vs. Value Report for various home upgrades. This year, only one project had an ROI of over 100% and that was fiberglass attic insulation. If you add insulation to your attic tomorrow and decide to sell your home right after, you can expect that you will be able to sell for a premium. Even if you aren't selling your home just yet, then the improved attic insulation will accrue even more value, in terms of lower heating bills and increased comfort in your home.

2. Energy-efficient windows. A typical window replacement yields over a 70% return in terms of the resale value of your home. Depending on the shape of your current windows, you could save an additional 15% or more off your heating bills. Plus, new windows can add even more value to your home in terms of increased thermal and acoustic comfort, more light, and better design.

New, energy-efficient windows bring a nice ROI.

3. Gutters and downspouts. This last item won't save you money directly by cutting down your energy bills. It could, however, save you tens of thousands of dollars in terms of avoided repairs. Clogged gutters and downspouts can trap moisture. When the weather gets really cold, they can also help ice to form. This can ruin your roof and sidings, causing tens of thousands of dollars in damage. It will also impact the curb appeal of your home, which generates higher returns in terms of resale value than remodeling the inside of your home.

And those are three of the best winterization projects you can undertake to maximize your investment. If you have any questions for me about any of these upgrades or anything else related to real estate, give me a call or send me an email. We look forward to hearing from you soon.

Why Are Homebuyers Feeling Optimistic?

Why are homebuyers more optimistic than they have been in the past few years? Here’s what we found.

Here’s a paradox for you: Right now, homebuyer confidence is at an all-time high, according to a survey performed by Fannie Mae. Furthermore, an increasing number of people, particularly renters, think now is a good time to buy a home. Yet at the same time, housing inventory remains very tight. It’s down 6.5% nationally from last year. Home prices are also up 6.9% nationally over last year.

In other words, homebuyers are optimistic at a time that the market seems to be favoring sellers. So, what's going on? Why are homebuyers so optimistic all of a sudden? Here are three possible explanations:

1. Lending is loosening up. Over the past several years, mortgage rates have seen historical lows. This has meant that homes are actually more affordable, in spite of the increase in prices. However, lending has been very tight. Fortunately, that’s changing. Lenders are approving mortgages at the highest rate since 2011, with 77% of mortgages for home purchases approved.

2. Jobs are looking good. At the moment, fewer homebuyers are worried about losing their jobs, according to the same Fannie Mae survey. It's not just job security that's contributing to greater optimism about buying a home. Overall income is higher, making homes more affordable by comparison. The median household currently has 150% of the income needed to buy a median home, compared to a historical average of just 125%.

3. Long-time renters are ready to buy. Millennials, the generation of people born after 1980, have largely opted out of homeownership until now. They have been renting for a longer time, putting them higher up on the pay scale compared to previous generations of first-time homebuyers. But now, many millennials are finally hitting an age when they are willing to commit to buying instead of renting. This is reflected in the Fannie Mae report, which states that much of the increase in homebuyer optimism comes from current renters.

What all does this mean for you? If you're looking to buy a home, all of the above reasons should give you confidence that now is indeed the right time to buy.

And if you have any questions about the local real estate market, whether you're thinking of selling or buying, give us a call or send us an email. We're here to help. We look forward to hearing from you soon.