Home prices increased about 6% over 1 year ago, and are projected to continue to rise at a rate of about 5% over the next year. That’s a pretty good jump in values over a two-year period creating wealth for existing homeowners in the form of increased home equity.
What this means is that these homeowners have access to additional capital if they decide to tap into the increased equity they are building in their home.
This can be done in 3 ways:
- Refinance and take out some equity
- Take a Home Equity loan to tap some funds
- Sell the home and take the additional capital to put toward a down payment on a bigger, better home.
All are good viable options in an improving economy, even with mortgage rates on the rise.
Those homeowners who procrastinated and waited a little too long to catch the refi train still have a chance to grab some equity, albeit at a little higher rate.
However, rates are still historically low by all accounts. Other homeowners who recently refinanced to lower their rate and payment may not want to refi again at the higher rate. But, they may choose to tap some equity through a HELOC to pay off other higher interest rate debt like student loans.
With an improving economy and a better outlook for employment and increased wages, still others may find now is the right time to pick up stakes and move to higher ground.
All three options present great opportunities for lenders in providing the financing related to each choice. Now is the time to diversify to be in a position to offer the types of financing needed to satisfy the needs of each homeowner, and of those ready to take their first step into ownership. Refinance opportunities may be dwindling but with appreciating home values options to offset the lost production do exist. It’s all a matter of finding them.
It is time to train, or re-train, your staff in the things that need to be done to attract and service the changing and diversified needs of homeowners and homebuyers. You’re not going to continue to survive strictly on refis. But, there will be plenty of opportunities out there for new business, if you know where to look.
It ain’t gonna come to you. You gotta go get it.
BTW, just thought of a 4th option; Reverse Mortgages…the game has changed. Play different.