Here are the facts. If you were to add up all the equity accrued by American homeowners as of this month, you’d have $5.8 trillion earned according to a recent CNBC article. This is the highest such amount that has ever been recorded. The average homeowner has well over $100,000 equity available to cash out. A good amount of this has come in the past couple years as home prices have risen rapidly.

The questions remain:

            Will this trend continue?

            Why aren’t more people cashing out their equity?

What is Tappable Equity?

It’s called “tappable equity.” It’s the current appraised value of a property minus 20 percent, which is the amount most lenders will require their borrowers to keep as a safety net. In the United States, the average tappable equity in the country grew by 7 percent in the first quarter of 2018. This is the largest jump ever and it is up 16.5 percent compared to this same time last year.

Home Equity Lines of Credit (HELOCs)

However, the number of home equity lines of credit (HELOCs) have pretty much leveled out and even the borrowers who get HELOCs aren’t seeking as much money. It seems like these equity loans would grow accordingly with the home prices, but there are reasons they aren’t. Remember that HELOCs use variable interest rates and the Federal Reserve has been steadily raising rates this year.

A home equity line of credit is still a very viable option if you are in the right situation, though you definitely to have to look at the upward trend of interest rates and factor that into the decision of how much you want to take out.

Cash-Out Refinances

While the interest rates continue to stay relatively low, the best way to take advantage of your equity is actually a cash-out refinance of your home. This is much different than a HELOC. Rather than taking out a second loan, you are refinancing your original mortgage. If you have a great deal of equity accrued in your home, you’ll be able to refinance at a lower rate while also cashing out some of that money.

So why aren’t more people taking advantage of today’s ideal cash-out equity conditions. That’s harder to say. I think Ben Graboske says it best. He is the executive vice president of Black Knight, the analytics company who measured the average equity numbers we’re talking about. “I think the typical American doesn’t have that level of awareness,” Ben says, “they’re probably not studying the numbers.”

Make the Right Mortgage Decisions

Now, cashing out equity isn’t right for everyone. Whether it’s a cash-out refinance or a HELOC, there are risks and variables involved. It’s important to review your financial situation carefully before taking equity out of your home, especially if you don’t really need the funds. If you have other major debts to pay off or want to put the money back into your home in order to help increase its value even more, then tapping into your equity makes some sense.

If you have questions about cash-out refinances and home equity lines of credit in San Diego County, I have your answers. Let’s sit down and discuss your situation to determine if cashing out your equity is the right choice for you and your family. Call Transparent Mortgage today at (619) 929-0199 or email me today at

Beau Hodson

Beau Hodson

About the Author Since 2003, Beau has been a mortgage professional and is a leading mortgage broker and lender in San Diego. As Founder and Senior Mortgage Advisor at Transparent Mortgage, he is truly committed to serving the needs of his clients and raising industry standards for integrity and transparency.