While most homeowners are unlikely to have that much value built into their properties, many are nonetheless tapping into the equity they’ve generated through home equity loans. Just how much in equity loans can homeowners get, and where can they find the most bang for their buck?
LendingTree’s new report analyzed more than 580,000 home equity loan offers to users of their online loan shopping platform from Jan through July to better understand how much money homeowners are looking to borrow against their equity.
The report found that nationally, the average home equity loan amount offered to homeowners is $104,102. In addition, though the national average is six figures, not all homeowners are offered such large loans. In fact, loan amounts can vary by tens of thousands of dollars by state.
The states offering the largest loans:
1. Massachusetts
- Average offered home equity loan amount: $145,788
- Average offered home equity loan interest rate: 8.15%
- Average offered home equity loan monthly payment: $1,014
2. New York
- Average offered home equity loan amount: $141,951
- Average offered home equity loan interest rate: 8.47%
- Average offered home equity loan monthly payment: $1,031
3. Vermont
- Average offered home equity loan amount: $135,170
- Average offered home equity loan interest rate: 8.41%
- Average offered home equity loan monthly payment: $967
And the states offering the smallest:
1. Mississippi
- Average offered home equity loan amount: $75,228
- Average offered home equity loan interest rate: 9.53%
- Average offered home equity loan monthly payment: $801
2. North Dakota
- Average offered home equity loan amount: $75,514
- Average offered home equity loan interest rate: 9.80%
- Average offered home equity loan monthly payment: $810
3. Missouri
- Average offered home equity loan amount: $76,791
- Average offered home equity loan interest rate: 9.07%
- Average offered home equity loan monthly payment: $737
Major takeaway:
“While getting into the real estate market can be challenging when home prices are as steep as now, that doesn’t mean high home values are terrible news. In fact, today’s persistently hot prices can be good for current homeowners,” said Jacob Channel, LendingTree’s senior economist and author of the report. “This is because homeowners generate home equity when the value of their property increases above the value of what they owe on their mortgage and other loans secured by their house. If property values rise dramatically—as they have relative to where they were at the start of the pandemic—homeowners can generate a significant amount of home equity, even if they haven’t paid off much of their mortgage.
“Building equity can yield numerous benefits for homeowners. For example, tapping into equity through a home equity loan or a home equity line of credit (HELOC) can allow homeowners access to cash they can use for various purposes, including home improvement projects and consolidating high-interest debt. Having equity can also be beneficial when it’s time to sell a home. The more valuable a home is relative to what was paid, the more profit a seller will make,” continued Channel.
Channel concluded, “Though today’s persistently high home prices are, in many ways, a cause for concern that should be addressed, the high amounts of home equity that many Americans are sitting on as a result of price growth over the past few years is a positive worth recognizing.”
For the full report, click here.
