Homeowners are sitting on trillions in cash

The amount of home equity borrowers now have at their disposal reached an all-time high in the third quarter of 2017. Approximately 80 percent of homeowners now have tappable equity, cash which could fuel the economy. Under the new tax law, the interest paid on home equity lines of credit is no longer deductible.

The 42 million homeowners with mortgages have a collective $5.5 trillion in “tappable” equity, according to Black Knight Data & Analytics, which studies the mortgage industry. This is $3 trillion more than they had when the housing market last bottomed in 2012, after the financial crisis. Black Knight defines tappable equity as the amount available for homeowners to borrow before reaching 80 percent of debt to value against their home.

Following the housing crash, millions of borrowers fell underwater on their mortgages, owing more than their homes were worth. Fast-rising home prices over the last two years have brought borrowers above water and beyond. Approximately 80 percent of homeowners now have equity they can use, cash which could fuel the economy. Just 2.7 percent of borrowers, or about 1.36 million, still owe more on their mortgages than their homes are worth.
So….what do you do with all this equity?  How about purchase a 2nd home or rental property?

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