60% of Mortgage Borrowers Have Over $100k in Home Equity

Growing home equity

Building equity is one of homeownership’s biggest advantages.

Many people build their wealth this way and tapping into home equity can provide money for home improvements, investing, paying off debt or an emergency fund.

Tappable home equity reached new heights in June and about 60% of borrowers have $100,000 or more to leverage.

Home equity hits “highest level ever”

Home equity grows or lessens alongside housing prices. Homeowners typically build equity over time, as their property values increase and their loan-to-debt ratios decrease.

At the end of June, total home equity in the U.S. hit a new record high of $17.6 trillion, according to Intercontinental Exchange’s (ICE) Mortgage Monitor.

Tappable equity — the amount a borrower can leverage while retaining a 20% equity buffer — also climbed to a new high of $11.5 trillion. That grew 4% from the first quarter and 9.2% year-over-year.

“Outstanding mortgage debt, including both first and second liens, hit an all-time high in June, but growth in home prices has outpaced that gradual rise in debt,” said Andy Walden, vice president of research and analysis at ICE. “Rising home prices have also continued to build the fortunes of existing homeowners, pushing tappable equity to its highest level ever.”

The average borrower sits on $214,000 in tappable equity. A 60% (about 32 million) share of borrowers have more than $100,000 built up and 90% (about 48.5 million) have at least some amount that they can leverage.

Ways to put your home equity to use

Home equity can be used for just about anything. Many homeowners tap it for home improvements or repairs, consolidating high-interest debt, or to help them buy another property.

Home equity is tied up in the value of your property and must be converted to money in order to be used. There are primarily three ways to do this: a home equity loan (HEL), a home equity line of credit (HELOC), or a cash-out refinance.

Home equity loans keep your existing mortgage and take out a second loan against your property. These typically have lower closing costs but may come with comparatively higher interest rates. Here’s everything you need for taking out a home equity loan this year.

HELOCs work like credit cards, with borrowing limits that can be repaid and reused. They usually come with variable rates and low-to-no closing costs. You pay interest only on the outstanding loan balance. They also have set “draw periods” where you have to repay the remaining balance in full once it passes. Here is a full list of HELOC requirements.

Cash-out refis replace your existing home loan with a new primary mortgage. The new loan’s balance will be larger than what you owed, with that difference returned to you as cash. Refinance closing costs average around 2-5% of the loan amount and usually get taken out of the cash back total. See if you qualify for a cash-out refi.

Your next steps

If you have a list of home improvement projects or debt to pay off, leveraging your home’s equity can be a great way to fund them.

Tapping into your equity is a major financial benefit to owning a home, and how your money can work for you. Talk to your lender to determine your borrowing options, choose the right loan type, and get a property valuation to assess the equity available to you.