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Your Home Equity Is A Bonus, It’s Not A Second Job

By Dan Green

Mortgage lenders are approving more than 75% of home buyer home loan applications, according to Ellie Mae; where are today’s mortgage rates for conforming loans, jumbo loans, FHA loans, USDA loans, and VA loans; and, research about rising home equity and how it’s creating more wealth than having a second job.

75% Of Home Buyers Mortgage Loans Now Approved

Fannie Mae National Housing Survey
Data from the Fannie Mae National Housing Survey

Mortgage lenders are saying “yes” more often this year.

According to mortgage software company Ellie Mae, whose software handles more than 3 million loan applications annually, a great percentage of home buyers are getting approved for their home loans as compared to this time last year.

It’s among the reasons why home sales are rising into the spring season, and why more renters are hitting this checklist of things you’ll do when you buy a home.

Word is out about the lenders loosening, too.

Separately, in a survey conducted by government-backed Fannie Mae, 59┬ápercent of people said they thought it would be “easy” to get a mortgage approved today and that’s big news because the reading of fifty-nine percent is the highest percentage of confidence among consumers since Fannie Mae started tracking such data.

It’s also big news for housing.

When renters feel confident they can get approved for a mortgage, they’re more likely to buy homes and grow roots. And, the first step to building roots is getting pre-approved to buy a home.

Make talking with a lender your priority. Get a pre-approval letter and use it to help you browse homes. Then, when you’re ready, that pre-appoval will get you the house.

Get An Aggressive Mortgage Rate Quote

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Today’s Mortgage Rates

Mortgage rates are higher today for all loan products, for buyers of homes and refinancing households.

5-Day Mortgage Rate Trend
5-Day Mortgage Rate Trend

When mortgage rates change, it changes the answer for “How Much House Can I Afford?” which is the question that kicks off most home buyer searches. Rates are higher on the year overall, but have trended lower in recent weeks.

The quoted mortgage rate you get from a lender will depend on your loan size, your credit score, and where you live. Your home type and closing time-frame affects your rate, too.

Shorter closing dates result in lower rates.

And remember: Mortgage rates change multiple times daily and are different between lenders. Comparison shop to get your best combination of mortgage rates and fees.

Home Equity Is Money Trapped On Paper

Home Equity Earned Per Work-Week Hour
Home Equity Earned Per Working Hour

Homeowners now have $5.4 trillion in home equity, collectively. It’s the most home equity held in U.S. history.

On a per-homeowner basis, the statistics are similarly staggering.

New data from Zillow Research shows a 7.6% increase in home values over the last twelve months which, when fixed to the median home price, results in a home equity appreciation of $14,800 per home.

This is roughly the same amount of money a person could earn at a federal minimum wage job, working 40 hours per week.

That’s based on median home values an median gains, though. When we apply the same methodology to other U.S. housing markets, the numbers get dramatic.

In Seattle, the typical homeowner’s home equity grew $113,000 over the last twelve months, which is equivalent to working a second job at $54 per hour.

And, in San Jose, home equity grew the equivalent of $100 per hour for every working hour on the calendar.

These are big numbers but there is difference between gaining home equity and earning actual cash. Cash can be spent. Home equity cannot.

Home equity is just “money on paper” until homeowners do a cash-out refinance to get their equity back as cash; or until they put a home equity line of credit on their property and access their money that way.

And equity, different from cash, can vanish when a market turns down.

Home equity is part of a homeowner’s net worth. It should be managed like other assets in a portfolio.

For help with your home equity and to know about your options, talk to a loan officer today.

Written by Dan Green

Dan Green is a mortgage lending expert and the founder of Growella. Prior to Growella, Dan was a six-time, top-producing loan officer; and, ranked repeatedly among the top 1% of loan officers nationwide. Dan's home buying expertise has been in print and on TV with The Wall Street Journal, NPR, Forbes, CNBC, and others.

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