Homeowners passing up tappable equity

Instead of using tappable equity (the appraised value of a home minus the 20 percent most lenders require borrowers to keep as a safety net) homeowners are letting it build.

Black Knight finds that tappable equity grew by seven percent in the first quarter of this year compared with the previous quarter. That’s a reported 16.5 percent increase from last year.

Stewart Title Chief Economist Ted C. Jones said in the last quarter tappable equity increased $380-billion and the last 12 months, increased $820-billion, which he says is phenomenal.

“People are saying, ‘you know what? I’ll just keep this money here as my retirement; that’s my net worth; I can buy another place; in the future I can sell this one’,” said Jones.

He added that the average homeowner has about $113,000 of tappable equity.

“Our economy is so flush and so good right now, people don’t need to use their home as an ATM. And, for me as an economist, that’s great news,” said Jones.

It’s reported that those who are tapping equity are doing it more through cash-out refinances than home equity line of credit.


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