Do Homeowners Realize Their Equity Position Has Changed?

    Do Homeowners Realize Their Equity Position Has Changed? | MyKCM

     

    According to CoreLogic’s latest Equity Report, nearly 268,000 homeowners regained equity and are no longer underwater on their mortgage in the first quarter. Homes with negative equity have decreased by 21.5% year-over-year. A study by Fannie Mae suggests that many homeowners are not aware of how their equity position has changed as their home has increased in value. For example, their study showed that 23% of Americans still believe their home is in a negative equity position when, in actuality, CoreLogic’s report shows that only 8% of homes are in that position.  The study also revealed that only 37% of Americans believe that they have “significant equity” (greater than 20%), when in actuality, 74% do! Do Homeowners Realize Their Equity Position Has Changed? | MyKCM

    This means that 37% of Americans with a mortgage fail to realize the opportune situation they are in. With a sizable equity position, many homeowners could easily move into a housing situation that better meets their current needs (moving to a larger home or downsizing). Fannie Mae spoke out on this issue in their report:

    “Homeowners who underestimate their homes’ values not only underestimate their home equity, they also likely underestimate: 1) how large a down payment they could make with their home equity, 2) their chances of qualifying for mortgages, and, therefore, 3) their opportunities for selling their current homes and for buying different homes.”

    CoreLogic’s report also revealed that if homes were to appreciate by an additional 5%, over 800,000 US households would regain positive equity.

    74% of Households in the US Now Have Significant Equity!

     

    CoreLogic’s latest Equity Report revealed that 92% of all mortgaged properties are now in a positive equity situation, while 74% now actually have significant equity (defined as more than 20%)! The report also revealed that 268,000 households regained equity in the first quarter of 2016 and are no longer under water.

    Price Appreciation = Good News for Homeowners

    Frank Nothaft, CoreLogic’s Chief Economist, explains:

    “In just the last four years, equity for homeowners with a mortgage has nearly doubled to $6.9 trillion. The rapid increase in home equity reflects the improvement in home prices, dwindling distressed borrowers and increased principal repayment.   These are all positive factors that will provide support to both household balance sheets and the overall economy.” 

    Anand Nallathambi, President & CEO of CoreLogic, believes this is a great sign for the market in 2016 as well, as he had this to say:

    “More than 1 million homeowners have escaped the negative equity trap over the past year. We expect this positive trend to continue over the balance of 2016 and into next year as home prices continue to rise.   Nationally, the CoreLogic Home Price Index was up 5.5% year over year through the first quarter. If home values rise another 5% uniformly across the U.S., the number of underwater borrowers will fall by another one million during the next year.” 

    Below is a map illustrating the percentage of households in each state with significant equity:  74% of Households in the US Now Have Significant Equity! | MyKCM Many homeowners with more than 20% equity in their home would be able to use that equity as a down payment on either a larger home or even a retirement home.

    What This Means for You

    If you are one of the many Americans who are unsure of how much equity you have in your home, don’t let that be the reason you fail to move on to your dream home this year!

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