If you’re considering refinancing or thinking about a 2nd mortgage or Home Equity Line of Credit, you might want to think twice before pulling equity our of your home. Declining home values caused by the poor economy is causing record numbers of homeowners to be underwater in their mortgages. Check out this article from the Seattle Times before taking any financial risks with your home.
Falling real estate prices are eating away at home equity. The percentage of their homes that Americans own is near its lowest point since World War II, the Federal Reserve said Thursday. The average homeowner now has 38 percent equity, down from 61 percent a decade ago.
Being underwater could prevent you from mortgage refinancing and government loan modification programs haven’t been a hit with lenders. There are a large number of homeowners unable to take advantage of today’s best refinance rates because of negative equity.
Anything you can do to keep equity in your home in a declining economy could save you from hardship later. Many homeowners in the United States learned a difficult lesson that they shouldn’t treat their homes like a savings account…too little too late according to the Seattle Times.