Home Equity: A Source of Strength for Homeowners Today

<article class="post-532742 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-532742"><span class="entry-date">November 14, 2022</span><div class="entry-header center-block text-center"><h1 class="entry-title">Home Equity: A Source of Strength for Homeowners Today</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Home+Equity%3A+A+Source+of+Strength+for+Homeowners+Today&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fhome-equity-a-source-of-strength-for-homeowners-today%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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<p><img alt="Home Equity: A Source of Strength for Homeowners Today | Simplifying The Market" class="webfeedsFeaturedVisual wp-post-image" decoding="async" link_thumbnail="" loading="lazy" sizes="auto, (max-width: 549px) 100vw, 549px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/11/10112202/home-equity-a-source-of-strength-for-homeowners-today-KCM-549×300.jpg" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/11/10112202/home-equity-a-source-of-strength-for-homeowners-today-KCM-549×300.jpg 549w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/11/10112202/home-equity-a-source-of-strength-for-homeowners-today-KCM.jpg 750w" style="display: block; margin-bottom: 5px; clear:both;max-width: 100%;" width="358"/></p>
<p>Experts agree there’s no chance of a large-scale <a href="https://www.simplifyingthemarket.com/2022/10/26/3-graphs-showing-why-todays-housing-market-isnt-like-2008/?a=712984-fa409495d5d70154d03a25e81e9540e2">foreclosure crisis</a> like we saw back in 2008, and that’s good news for the housing market. As Mark Fleming, Chief Economist at <em>First American</em>, <a href="https://blog.firstam.com/economics/pandemic-boom-markets-cooling-the-fastest">says</a>:<span id="more-47440"></span></p>
<blockquote>
<p><em>“. . . don’t expect a housing bust like the mid-2000s, as lending standards in this housing cycle have been much tighter and homeowners have historically high levels of home equity, so <strong>there likely won’t be a surge in foreclosures</strong>.”</em></p>
</blockquote>
<p><a href="https://www.mba.org/news-and-research/newsroom/news/2022/10/17/share-of-mortgage-loans-in-forbearance-decreases-to-069-in-september-">Data</a> from the <em>Mortgage Bankers Association</em> (MBA) helps tell this story. It shows the overall percentage of homeowners at risk is decreasing significantly with time (<em>see graph below</em>):</p>
<p><a href="https://files.simplifyingthemarket.com/wp-content/uploads/2022/11/10112159/percent-of-mortgages-in-forebearance-decreases-to-0.69-percent-in-september-MEM.png"><img alt="Home Equity: A Source of Strength for Homeowners Today | Simplifying The Market" class="aligncenter wp-image-47441" decoding="async" height="488" loading="lazy" sizes="auto, (max-width: 650px) 100vw, 650px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/11/10112159/percent-of-mortgages-in-forebearance-decreases-to-0.69-percent-in-september-MEM.png" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/11/10112159/percent-of-mortgages-in-forebearance-decreases-to-0.69-percent-in-september-MEM.png 960w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/11/10112159/percent-of-mortgages-in-forebearance-decreases-to-0.69-percent-in-september-MEM-400×300.png 400w" width="650"/></a></p>
<p>But even though the volume of homeowners at risk is very low, there is still a small percentage of homeowners who may be coming face to face with foreclosure as a possibility today. If you’re facing difficulties yourself, it can help to understand your options. It starts with knowing what foreclosure is. <em>Investopedia</em> <a href="https://www.investopedia.com/terms/f/foreclosure.asp">defines</a> it like this:</p>
<blockquote>
<p><em>“</em><em>Typically, default is triggered when a borrower misses a specific number of monthly payments . . .<strong> Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property.</strong>” </em></p>
</blockquote>
<p>The good news is there are <a href="https://www.nerdwallet.com/article/mortgages/what-is-foreclosure">alternatives available</a> to help you avoid going through the foreclosure process, including:</p>
<ul>
<li>Reinstatement</li>
<li>Loan modification</li>
<li>Deed-in-lieu of foreclosure</li>
<li>Short sale</li>
</ul>
<p>But before you go down any of those paths, it’s worth seeing if you have enough equity in your home to sell it and protect your investment.</p>
<h4><strong>You May Be Able To Use Your Equity To Sell Your House</strong></h4>
<p><a href="https://www.simplifyingthemarket.com/2022/09/20/watching-the-stock-market-check-the-value-of-your-home-for-good-news/?a=712984-fa409495d5d70154d03a25e81e9540e2">Equity</a> is the difference between what you owe on the home and its market value based on factors like price appreciation.</p>
<p>In today’s real estate market, many homeowners have far more equity in their homes than they realize due to the home price appreciation we’ve seen over the past few years. According to <a href="https://www.corelogic.com/intelligence/homeowner-equity-insights/"><em>CoreLogic</em></a>:</p>
<blockquote>
<p><em>“The total average equity per borrower has now reached almost $300,000, the highest in the data series.”</em></p>
</blockquote>
<p><strong>So, what does that mean for you?</strong> If you’ve lived in your house for at least a few years or more, chances are your home’s value, and your equity, has <a href="https://www.simplifyingthemarket.com/2022/10/05/the-long-term-benefit-of-homeownership/?a=712984-fa409495d5d70154d03a25e81e9540e2">risen dramatically</a>. In addition, the mortgage payments you’ve made during that time chipped away at the balance of your loan. If your home’s <a href="https://www.simplifyingthemarket.com/2022/09/26/the-true-strength-of-homeowners-today/?a=712984-fa409495d5d70154d03a25e81e9540e2">current value</a> is higher than what you still owe on your loan, you may be able to use that increase to your advantage.</p>
<p>Rick Sharga, Executive VP of Market Intelligence at <em>ATTOM Data</em>, <a href="https://www.attomdata.com/news/market-trends/foreclosures/attom-september-and-q3-2022-u-s-foreclosure-market-report/">explains</a> how equity can help:</p>
<blockquote>
<p><em>“Very few of the properties entering the foreclosure process have reverted to the lender at the end of the foreclosure. . . <strong>We believe that this may be an indication that borrowers are leveraging their equity and selling their homes rather than risking the loss of their equity in a foreclosure auction</strong>.”</em></p>
</blockquote>
<h4><strong>Lean on Experts To Explore Your Options</strong></h4>
<p>To find out how much equity you have, work with a local real estate professional. They can give you an estimate of what your house could sell for based on recent sales of similar homes in your area. You may be able to sell your house to avoid foreclosure.</p>
<p>If you find out you have to pursue other options, your agent can help with that too. They’ll be able to connect you with other professionals in the industry, like housing counselors, who can look into your unique situation and offer advice on next steps if selling isn’t your best alternative.</p>
<h3><strong>Bottom Line</strong></h3>
<p>If you’re a homeowner facing hardship, let’s connect so you have an expert on your side to explore your options and see if you can sell your house to avoid foreclosure.</p>
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