Average owner earned over $55,000 in equity in 2021: CoreLogic report
Average owner earned over ,000 in equity in 2021: CoreLogic report

Homeowners earned more than $55,000 on average in their home equity in 2021, a new CoreLogic report has revealed. (iStock)

Homeowners earned an average of $55,300 per borrower in 2021, a collective gain of more than $3.2 trillion in equity gains for the year, according to CoreLogic’s fourth quarter. Homeowners Net Worth Report.

Net worth rose for homeowners with a mortgage — about 63% of all homeowners — by 29.3% annually in the fourth quarter of 2021, the report said. Indeed, house prices rose at record rates throughout the year. In particular, Hawaii, California and Washington saw the highest average stock gains, the report said. In contrast, North Dakota and Washington, DC saw the lowest.

“Home prices rose 18% in 2021 in the CoreLogic Home Price Index, the largest annual gain in its 45-year history, driving a surge in real estate wealth,” said CoreLogic’s chief economist, Frank Nothaft. “For low- and middle-income homeowners, home equity has always been a major source of wealth.”

If you want to take advantage of your increased principal, consider taking out a cash refinance. Visit Credible to find your personalized interest rate without affecting your credit score.


Rising prices mean less risk for homeowners

Homeowners experience less risk in the housing market as prices rise. That’s because negative equity, in which a homeowner owes more on their home than it’s worth, fell 3% to 1.1 million homes, according to CoreLogic’s report. This decline was helped by the appreciation in house prices seen in the fourth quarter of 2021 and represented a 12-year low.

By comparison, 1.5 million homes had negative equity in the fourth quarter of 2020, nearly a quarter (24.9%) more than in 2021. Borrowers can exit equity negative when they pay down more on their home or when the value of their home increases.

Negative equity may also be known as an “underwater” or “upside down” mortgage. Although the majority of lenders won’t refinance a home with negative equity, consumers might consider refinancing their mortgage to get back on track.

Owners can use a mortgage refinance calculator to see if it suits their financial situation, and they can also visit Credible to compare multiple mortgage lenders at once.


How Homeowners Can Access Money From Their Home

Homeowners can take advantage of house price appreciation and have several options to capitalize on their growing net worth. This can be used to pay off high interest credit card debt, fund home improvement projects and more.

One way to tap into the equity in your home is to sell it. In the midst of today’s competitive real estate market, sellers could walk away with a profit that could eventually pay for the down payment on a new home, with some cash left over. Mortgage giant Fannie Mae’s Economics and Strategy Research Group forecasts an above-average rise in house prices of 7.6% this year amid soaring inflation. He added that buyers could face affordability issues, as well as high demand and inventory shortages.

Another option for homeowners who don’t want to move or buy a new home in the face of increased competition is refinancing. Homeowners who take out cash refinance can take cash out of their home and possibly even lower their monthly payment with a new, lower interest rate. Currently, interest rates average just below 4% annual percentage rate of charge (APR), according to data by Freddie Mac.

Homeowners can also take out a home equity line of credit (HELOC). This acts as a second lien on a home and opens a new loan against your home’s appraised value. Home equity loans are separate from your current loan and can come with different loan amounts depending on the value of the home.

If you want to see the best way to leverage the equity in your home for home improvements or to see what equity you might have, contact Credible to speak to a mortgage expert and get all your questions answered.

You have a financial question, but you don’t know who to contact? Email the Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.


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