Earlier this year, we predicted 2022 as the Year of Home Equity. A recent CoreLogic Homeowner Equity Insights report shows that 2022 has exceeded even our lofty home-equity expectations.
As of 2Q 2022, homeowners with mortgages have seen their equity increase by 27.8% since 2Q 2021, or an average increase of $60,200 per borrower year-over-year. Total average equity per borrower has now reached $300,000, the highest since CoreLogic began publishing home equity data.
All of this is fantastic news for homeowners, but what does it mean for lenders and mortgage advisors?
More opportunities to help your borrowers reach their financial goals and more chances for you to be a Home Equity Hero.
In 2022, most loans — regardless of their ultimate purpose — will stem from conversations about home equity. Fortunately, with Sales Boomerang’s alerts, mortgage advisors always know when prospects or past customers have accumulated enough equity to unlock new financial opportunities.
Potential opportunities arising from increased home equity, even with rising interest rates, include:
- Reduce monthly payments by removing private mortgage insurance premiums: In 2022, many mortgage holders will have gained enough equity via home price appreciation to get rid of MIP or PMI early by refinancing into a conventional loan with no PMI. If the new loan remains a 30-year loan, the borrower will see a noticeable reduction in monthly payments.
- Pay off debts or pay for costly repairs: Unfortunately, some borrowers will face a time-sensitive need to make home improvements they can’t otherwise afford, like repairing a leaky roof or remediating a basement moisture problem. If they don’t have the cash on hand to make these kinds of repairs debt-free, tapping into home equity may be one of the most affordable options at their disposal. For a conventional cash-out refinance, borrowers can take out a maximum of 80% of the value of their home (after subtracting the amount they owe on their current mortgage). But consumers do not have to take out the maximum; borrowers may also choose to cash out just the amount of equity they need, leaving the rest untouched.
- Obtain a reverse mortgage and age in place: While some seniors may choose to liven up their days in an active adult community, others prefer to age in place in the house they’ve called home for years. Facing inflation with a fixed income may have some seniors considering a home-equity conversion mortgage (HECM), a type of reverse mortgage that allows older borrowers to tap the equity in their homes to eliminate their monthly mortgage payment.
Sales Boomerang removes the mystery from your database with four alerts that keep you apprised of your contacts’ home equity position:
- Equity Alert: A customer or prospect’s home equity has increased.
- FHA MI Removal Alert: An FHA borrower has exceeded 20% equity and can remove mortgage insurance (MI).
- Reverse Mortgage Alert: A prospect or past customer would be a good candidate for a home-equity conversion mortgage (HECM) or other reverse mortgage product
- Cash-Out Alert: A prospect or past customer is credit qualified AND has built sufficient equity to tap into the cash in their home.
Knowing when your borrower has an advantageous home-equity position is a great start, but how do you seal the deal? In today’s market, mortgage advisors need to convert every viable lead. The good news is that home equity can help borrowers achieve practically any financial goal they desire, from funding home improvements to paying off debts and from buying a new home to investing for the future.
The key to conversion is offering advice — not price. Mortgage Coach is here to help with a customizable Total Cost Analysis that makes it easy to compare any number of loan scenarios.
Contact Sales Boomerang and Mortgage Coach today to find out how the industry’s only automated borrower retention and conversion platform can help you and your borrowers take advantage of near record-high home equity.
