As the housing market continues to rise and the prices and worth of homes rise with it, many homeowners are cashing in on their newfound income more quickly than the mortgage lenders would like. While most homeowners have been holding out on selling their home due to the market crash nearly ten years ago, they were also refinancing their homes. However, that has since begun to change, homeowners are finding it more difficult to resist either selling their homes or engaging in equity lines of credit against the value of their homes. This means that more people are going to be able to take advantage of the best mortgage rates in Delaware .
Some reasons these homeowners are getting equity lines could be due to buying another property, paying off large debts, or some other unexpected expense that needs to be taken care of. Homeowners have the option of an equity line of financing that can provide them with a specific cash amount that is typically interest free for the first ten years or so and is valued at or near their total home worth. So naturally, with housing prices on the rise, the homeowners are able to receive a higher amount in equity. Research has shown that the percentage of homeowners who now have an equity line has increased 20% in the past two years.
While this option for an equity line of cash could be enticing, it does come with its’ downfalls and possible risks. For example, interest rates for home loans are directly affected by housing prices. This means that with housing prices on the rise, you can bet the interest rates are rising as well, making it more difficult for some to purchase a home and reducing the option for lower down payments. Not to mention the obvious fact that higher interest rates on mortgage loans equals higher payoff costs, which could in turn mean that potential home buyers could opt out of buying altogether due to the high cost, creating another possible housing market crash over the years. The housing market is a tricky environment to navigate in order for it to be favorable to both homeowners and potential buyers.
In closing, while homeowners seem to be cashing in on equity lines at a higher rate than has been seen in several years, there still seems to be some caution amongst many. And in addition to this caution, the mortgage lenders have become stricter on equity loans as a result of the recent housing market crash, which could help out the market overall. Homeowners now have to provide proof that they can repay the equity lines and provide financial documentation to back them up prior to their approval. So, while the equity lines are increasing, the mortgage market is also doing its part to make sure that the housing market stays as balanced as possible.
If you want more information on what to expect during 2017, contact the experienced professionals at Highlands Mortgage. We are a mortgage brokerage firm in Delaware, and will help you find the best mortgage rates around so you can buy the home of your dreams.