Home Equity
Home equity, a measure of family financial health, has fallen to its lowest level in 30 years.
Since the refinancing boom began in 2001, American homeowners have cashed out more than $330 billion in home equity to cover rising living expenses and credit card debt, putting at risk their most important asset – their home. Due to ever-increasing financial pressures, families often depend on high-cost credit as a way to bridge the gap between stagnant or decreasing incomes and rising costs just to live. This third brief in the Borrowing to Make Ends Meet series examines rising debt and debt burdens, as well as the consequences of leveraging equity through credit card debt.
To ease the burden of high cost credit card debt, some families look to cash in their homes’ equity to pay down consumer debt and finance basic needs. Policy changes at the federal level could help homeowners pay down their debt at reasonable rates, over reasonable amounts of time.