Home Equity and My Two Cents

The mortgage lending industry has been challenged but here are some "green shoots".

Lines of Business for Brokers and Loan Officers in the Mortgage Industry and their potential.

• Home Equity loans – 10 to 22 trillion in value estimate.
• HECM loans - For people 62 and older, remember your home is an asset. Use it wisely to secure your future retirement.
• Home Improvement loans - 10 to 22 trillion in equity value, averages 217k available per mortgage holder
• DSCR loans – Business loans based on the income/revenue generated by the property as a qualifier.
• Purchase loans – Yes, far fewer but available. Marry the house, date the rate could be the motivator.

According to?Investopedia, the average amount of home equity in the United States is at a record high. The average mortgage holder now owns?$185,000?worth of equity, which increased by almost?$48,000?in 2021. This represents an increase in average equity of almost?35%?in 2021 and means that there is currently?$10 Trillion?in home equity held across the U.S. The amount of home equity you can borrow depends on several factors, including your loan-to-value ratio (LTV). The LTV is the ratio of the amount you want to borrow to the appraised value of your home. Most lenders will allow you to borrow up to 80% of your home's appraised value. So, if your home is worth $500,000 and you have an LTV of 80%, you could borrow up to $400,000.

On the other hand, Statista reports that the value of homeowner equity in the United States increased from approximately 8.77 trillion U.S. dollars in 2010 to approximately 29.3 trillion U.S. dollars in 2022.

For consumers, it's important to note that the amount of home equity you can borrow will also depend on your credit score and debt-to-income ratio. If you have a good credit score and a low debt-to-income ratio, you may be able to borrow more money against your home equity.

If you're considering borrowing against your home equity, speaking with a loan officer is important to get a personalized quote. They can help you determine how much money you can borrow and what the terms of your loan will be.

Here are some additional things to keep in mind when borrowing against your home equity:

• You'll need to pay interest on the money you borrow.
• You'll need to make monthly payments on your loan, which does not apply to HECM.
• If you default on your loan, you could lose your home.

It's important to only borrow against your home equity if you're sure you can afford the payments. Borrowing against your home equity can be a great way to consolidate debt, pay for home improvements, or cover unexpected expenses. However, it's important to do your research and understand the risks before you take out a home equity loan.

Yes, times are tough out there, but the opportunity is equally as consequential.

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