Over the past few years we’ve had several stories about HELOC loans (home equity lines of credit) and their potential expiration creating havoc in the housing market among current homeowners. However, as Keeping Current Matters points out, as we’ve experienced strong price appreciation over the last last 6 years they show that homeowners are being much more responsible with their home equity this time around. After all, according to data, over 48% of all single-family homes in the country have over 50% equity. What a difference indeed.
“When real estate values began to surge last decade, people started using their homes as personal ATMs. Homeowners would refinance their houses and convert their equity into instant cash (known as “cash-out” refinances). Because homes were appreciating so rapidly, many homeowners tapped into their equity multiple times….This left homeowners with little-or-no equity left in their homes, so when prices started to fall many homeowners found their houses in a negative equity situation…”