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Axios
27-06-2025
- Business
- Axios
Homeowners' mortgages include large share for insurance payments
More than a quarter of New Orleans-area homeowners' mortgage payments went to insurance last year, up from the decade's low of 18.9% in 2019, data shows. Why it matters: Rising costs for both insurance and property taxes threaten to make homeownership unaffordable for many. The big picture: Nationally, a growing share of monthly payments are going toward insurance, and that's not expected to change anytime soon, according to ICE Mortgage Monitor, an industry data provider. The analysis looks at single-family homes with mortgages that have taxes and insurance escrowed. Between the lines: More frequent natural disasters, plus rising costs to rebuild homes afterward, have hiked overall insurance costs, says Andy Walden, ICE's head of mortgage and housing market research. Rocketing home values also lift the cost of coverage, he tells Axios. By the numbers: The U.S. average monthly insurance payment ballooned from $106 to $191 over the past decade, per the data. That's practically chump change in New Orleans, where the average monthly insurance payment has leapt from $284 to $477. What's next: Insurify, which helps people compare quotes from multiple providers, projects home insurance premiums will climb in every U.S. state by the end of 2025 — with Louisiana expected to see the nation's largest rate increase of 27% — nearly $3,000 — to $13,937, by the end of 2025.
USA Today
17-05-2025
- Business
- USA Today
Americans are awash in home equity. Here are the best ways to access it.
Americans are awash in home equity. Here are the best ways to access it. Show Caption Hide Caption Strange and bizarre creature from 506 million years ago discovered A three-eyed predator 'sea moth' that lived 506 million years ago has been discovered in Canada. It's a widespread belief in American life: it's hard to become a homeowner, but once you're in the door, you're home free, with few of the financial challenges that often plague renters. Not so fast. Yes, homeownership often represents much more stable living expenses than renting – but in an age of rising insurance costs and property taxes, that tradeoff isn't so clear-cut any more. And many Americans would agree that the price of everything else, from eggs to medical bills just seems to grow by the week. That includes home prices. Home values are up roughly 50% in five years, leaving households with $35 trillion in equity. Of that amount, homeowners who have a mortgage have $11 trillion in 'tappable equity' – money that can be borrowed against while leaving a 20% equity buffer in the home – as of the start of 2025, according to the ICE Mortgage Monitor. Anyone who knows the feeling of being house-rich but cash poor probably also knows the uncertainty of navigating the options that bridge those two realities. There have long been a plethora of financial products available for homeowners, from home equity loans to reverse mortgages, said Noelle Melton, vice president of national homeownership programs and lending at the national nonprofit NeighborWorks America. But it's critical that homeowners understand the financial products that exist, their pros and cons, and how or if they fit into their own individual financial plan, Melton added. 'People don't often view themselves as having assets,' she said. 'They're focused on figuring out how to put pieces together to make ends meet. But everyone can benefit from having an unbiased guide to advise them on the bigger picture of how this impacts their long-term financial health.' Bank products for tapping home equity The most familiar ways to convert equity to cash are loan products, offered by banks and other lenders. Home equity loans give you a lump sum payment – usually with a fixed interest rate, but not always – that must be paid back over a period of years. Home equity lines of credit set out a certain maximum amount you can borrow, pay back, then borrow again. HELOCs typically have floating interest rates. Cash-out refinances allow you to take out a new mortgage that's more than what you currently owe, then pocket the difference as cash. Reverse mortgages, which are available only to homeowners over 62, act in the opposite way a traditional mortgage does: the lender pays the homeowner a certain amount either every month or as a one-time lump sum. More: Homeowners have nearly 40x the wealth of renters. But what's causing the wealth gap? In order to be approved for any of those products, a borrower needs a strong credit profile, and the willingness and ability to assume more debt. They have other drawbacks, as well: reverse mortgages carry extensive fees, and there's always concern that a homeowner may outlive the cash provided by the product and be left with no equity to fall back on. Similarly, home equity loans and lines of credit tend to have high interest rates: in the mid-8% range as of mid-May, according to Bankrate. Cash-out refinance rates are a little better: they're in the high-6% range as of this writing, but more than half of homeowners with a mortgage had a rate below 4% as of the end of 2024. Taking on a new mortgage at a much higher rate may be a difficult proposition for many. Home equity-sharing agreements For all those reasons, debt products aren't right for many homeowners. Jeff Glass founded Hometap, one of several companies that offer what are sometimes called 'home equity investments' or 'home equity sharing agreements' as a response. "For many people, the idea of having to borrow more doesn't work," Glass told USA TODAY. "And the idea of having to sell all of it or nothing seemed too binary to us. So we created a third option which is this idea of selling some of it." What that means in practice is that you offer a company like Hometap a stake in your home in exchange for upfront cash. When you sell the property or otherwise close out your agreement with the company, you pay back the cash you initially received, plus a percentage of the home's appreciated value and some fees. But home equity investments make many consumer advocates very uneasy. Sharon Cornelissen, director of housing for the nonprofit Consumer Federation of America, says there is often a 'mismatch' between how the products are marketed to consumers and what they wind up paying, which may not be clear until the end of the term. Cornelissen points to research from the Consumer Financial Protection Bureau which found that homeowners who use equity sharing agreements tend to pay interest rates nearing 20%. 'They're offering solutions for consumers who may not have other options," Cornelissen said. "I would not endorse the products." Glass agrees. 'Most of the time a loan will turn out in retrospect to be less expensive,' he said. 'So if someone has the incremental cash flow to be able to support that loan and isn't going to be stressed out about it or having to make meaningful compromises in their life that affect the quality of their life, then I would say for those folks doing a HELOC or some kind of cash out refinance often will make a lot of sense.' But the number-one reason most homeowners go to Hometap, Glass said, is to pay off debt or bills and repair credit – hardly the kind of borrower who's likely to easily obtain a loan from a bank. Other types of homeowners may also seem like iffier borrowers, including small-business owners, retirees, or freelancers with erratic incomes, meaning they may not have the luxury of the cheaper products. How to choose the best home equity product for you With all of the options available, one of the best ways to know which one is right for you is to ask for unbiased third-party help. A financial adviser may be able to assist you: even if you don't normally work with one, you can find 'advice only' professionals who may charge by the hour or by the project to help you assess your choices. HUD-approved housing counselors, like the ones at NeighborWorks America, are another option. Counselors may be better known for their assistance in helping more marginal borrowers become homeowners, but Melton says they are available throughout the home owning cycle, no matter what kinds of questions an owner may have. Consultations are usually free or available for a nominal fee. If you have the flexibility and credit profile and think products like a home equity loan or line of credit is right for you, make sure you understand the terms. Remember that entering into a new mortgage, via a cash-out refinance, may mean starting to pay down principal all over again. If you're opting for a home equity loan or line of credit, make sure you know whether the interest rate is adjustable – which means it might go up just as easily as down – or fixed. On the other hand, if you're considering entering into a home equity sharing agreement or investment with a company like Hometap, Unlock, or Point, don't feel rushed into anything. If you're working with a financial adviser or counselor, ask them to review any paperwork you have from the company. The CFPB also notes that some customers discovered unexpected problems in refinancing their existing mortgages if they had entered into a home equity investment, so keep that possibility in mind. Finally, Cornelissen urges anyone who has a bad experience with a home equity sharing company to report it promptly to the CFPB and to state regulatory agencies like the attorney general. That will enable authorities to understand and regulate the industry better – something Glass says he and his counterparts welcome. Read next: Billions of dollars for millions of Americans: why 'delete the CFPB' might not fly
Axios
28-04-2025
- Business
- Axios
How much of Tampa Bay's mortgage bill is consumed by home insurance
Insurance eats up more of a homeowner's housing bill in Tampa Bay than almost anywhere else in the nation, data shows. Why it matters: Steep insurance costs have dragged down our housing market, with demand plummeting, houses on the market longer and fewer people moving here. Zoom in: Home insurance made up 14.9% of the average mortgage payment here in December, per ICE Mortgage Monitor, a data provider for the industry. Only New Orleans, Miami and Oklahoma City had higher shares. The analysis looks at single-family homes with mortgages that have taxes and insurance escrowed. By the numbers: Our average payment ballooned from $192 a month to $300 over the past decade. The national average jumped from $106 to $191. Context: A decade ago, insurance made up over 15% of the average payment in Tampa Bay. But it dipped through the mid-2010s. More frequent natural disasters, plus rising costs to rebuild homes afterward, have hiked insurance costs, says Andy Walden, ICE's head of mortgage and housing market research. Helene and Milton wrought an estimated $5 billion in damage for Hillsborough and Pinellas counties. Zoom out: Florida homeowners had the highest average annual home insurance bill last year at $14,140. As a result, 1 in 5 homeowners in the state have opted to forgo coverage altogether.
Yahoo
03-03-2025
- Business
- Yahoo
Winners And Losers In The Real Estate Market—American Homeowners Are Sitting On $11.2 Trillion In Equity
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. The results of mortgage exchange operator Intercontinental Exchange's November 2024 ICE Mortgage Monitor, shows American homeowners are sitting on $11.2 trillion in accessible equity. The total equity is $17.2 trillion, but the available amount is smaller because most home equity lenders don't like lending out more than 80% of the homeowner's equity. Nevertheless, ICE Mortgage Monitor's study illustrates the unprecedented borrowing power possessed by American homeowners. The study showed that the average homeowner has $319,000 worth of equity in their home, with $207,000 of it being accessible. ICE noted that despite the available equity, borrowers have been using it at only half the 10-year average of 0.92%. Second mortgages are down by 26% and cash-out refinances declined by 69% in relation to normal borrowing activity. It's likely that reticence to access equity by homeowners has something to do with interest rates Don't Miss: Many don't know there are tax benefits when buying a unit as an investment — If there was a new fund backed by Jeff Bezos offering a ? "Despite a two-year high for equity withdrawals in the third quarter, homeowners are still tapping their housing wealth at less than half the rate they have historically." ICE Vice President of Research and Analysis Andy Walden said He continued, "Second lien withdrawal rates are currently running more than a quarter below 'normal' and cash-out refi withdrawals are still down almost 70%. Over the past 10 quarters homeowners have extracted $476B in equity, exactly half the extraction we'd expect to see under more normal circumstances. That equates to nearly a half a trillion untapped dollars that hasn't flowed back through the broader economy." The ICE study results also speak to the strength of the "lock-in effect," where today's homeowners are reluctant to sell because of the likelihood that they will re-enter a home market with reduced buying power due to higher home prices and mortgage rates. Now it appears that the "lock-in" effect is taking a chunk out of home equity borrowing as well. The good news for homeowners is that they have equity to access at all. Trending: CEO of Integris gathered a team of senior investment managers who have $34.22 billion in combined owned and managed assets in the West Coast — That's what it looks like on the winning side of this equation. On the other side, sit prospective buyers, who are taking hits from all sides. The lock-in effect means less inventory, while high construction costs keep developers in the most inventory-starved markets on the sidelines. The high interest rates are a double whammy for buyers because developers depend on financing to get projects off the ground and buyers need financing to complete purchases. Buyers are also growing more pessimistic about the prospect of interest rates ever returning to the low-single digits like they were between the great financial crisis of 2008 and the COVID-19 pandemic. A New York Federal Reserve study on consumer expectations released last May showed respondents believe interest rates will be near 10% in the next three years. Although that study came out before the Federal Reserve lowered interest rates in late 2024, buyer pessimism remains high. The Fed's recent decision to pause the rate cuts due to fears over rising inflation put even more buyers back into a holding pattern. All told, it means the housing affordability crisis isn't going to get better anytime soon. If you're already an owner, you're likely sitting on a pile of equity. Read Next: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — , which provides access to a pool of short-term loans backed by residential real estate with just a $100 minimum. This article Winners And Losers In The Real Estate Market—American Homeowners Are Sitting On $11.2 Trillion In Equity originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
CBS News
26-02-2025
- Business
- CBS News
How much does a $30,000 HELOC cost monthly in 2025?
Home equity line of credit (HELOC) interest rates remain low in early 2025, providing a glimmer of hope for homeowners looking to borrow from their home equity. HELOC rates are now lower than home equity loan rates and remain well below personal loan and credit card APRs. Though HELOC rates might be higher than they were a few years ago, homeowners are enjoying substantial home equity amounts — the average house has $319,000 in equity, according to a recent ICE Mortgage Monitor report. In fact, most homeowners could easily tap into around 10% of their equity — $30,000 — and still have an average of $290,000 left for future financial needs. If you're ready to use your home equity but aren't quite sure how much a $30,000 HELOC will cost now, in the early part of 2025, we've calculated payments for two common repayment lengths. See how much equity you could borrow with a HELOC here now. How much does a $30,000 HELOC cost monthly in 2025? When shopping for a HELOC, you may find that some lenders will require you to take out more than $30,000 in equity. However, other home equity lenders have a $10,000 minimum. You won't have as many options as you would for, say, a $70,000 or $80,000 HELOC, but, you'll likely have multiple lenders to choose from. Here's how much you can expect to pay monthly for a $30,000 HELOC with today's average rate: 10-year HELOC at 8.28%: $368.44 15-year HELOC at 8.28%: $291.57 HELOC rates are variable, though — they adjust monthly. That means your rate can rise or fall every month depending on multiple factors including your lender and market conditions. Knowing that, here's what you could expect to pay monthly if rates fell by 0.50%: 10-year HELOC at 7.78%: $360.50 15-year HELOC at 7.78%: $282.90 And here's what you'd pay monthly if rates rose by 0.50%: 10-year HELOC at 8.78%: $376.46 15-year HELOC at 8.78%: $300.37 While HELOCs offer several advantages, including low interest rates compared to other funding options, you have to use your home as collateral to get your line of credit. If you default on your payments, your lender could repossess your house. This consequence makes it critically important to understand what your monthly payment amount will be. Find out what the lowest HELOC rates are here. Don't forget about HELOC tax benefits HELOCs are a convenient way to access your home equity. The benefits don't stop there, though. HELOCs also provide a tax advantage, which will be applicable if you use the line of credit this year. The IRS allows you to deduct the interest you pay on HELOC funds you use to "buy, build, or substantially improve" your primary or secondary residences. However, you only get the deduction for work completed on a primary or secondary home. So, if you use a $30,000 HELOC to pay for $20,000 in home improvements and a $10,000 vacation, you can only deduct the interest you paid on the $20,000. The bottom line At today's rate for a $30,000 HELOC, you'll pay less than $400 a month for a 10-year line of credit and less than $300 for a 15-year line of credit. Taking out a $30,000 HELOC right now will cost you a little more than it did several years ago when rates were lower, but since the average home equity amount is so high, a $30,000 line of credit still leaves you with a lot of equity for a future HELOC or home equity loan.
