Ways to reduce debt if you own a home

Here at the Place Portland Team, it is always our goal to provide you with advice that will help you be financially stable for a long time. Whether you haven't purchased your first house yet or you're on your 10th investment property, we want to be in conversation.

So let's talk about home equity. As of October 2024, the average homeowner has about $315,000 in equity- crazy, right?! But what if you're in that boat but don't exactly feel financially stable. News flash, that is a LOT of homeowners. The good news is that it's pretty easy to access that equity to give your current situation a little relief. So let's talk about what that could look like.

Fintech provider, FirstClose, recently released its findings from a national consumer survey that measured homeowners' level of awareness of the benefits of their home equity. It turns out consumers don't know all that much about leveraging home equity debt versus other kinds of consumer debt.
 
The survey also identified some misconceptions about home equity products- In fact, 37% of respondents mistakenly believed that if they took out a HELOC (Home Equity Line of Credit), they would be giving up their historically low first mortgage interest rate. When asked if they would access their home's equity to pay off debt, the responses were almost evenly split with 49% responding yes and 51% responding no. More than half of respondents (56%) said they would access the equity in their homes for a home renovation project. But, only 34% of respondents said they would access their equity to finance a big purchase, such as a car, a trip, and tuition, among other things.
 
"The findings of this survey underscore the critical gap in consumers' understanding of the financial benefits of leveraging their equity," said CEO of FirstClose, Tedd Smith. "U.S. homeowners currently have more than $28 trillion in tappable home equity that could be used to pay down debt, which now has topped $1.14 trillion. If a consumer with an average [consumer debt] balance of $6,500 made only the minimum payment it would take 13 years and cost roughly $11,800 to pay off the debt completely."

What would your financial life look like if you used that equity to pay off some expensive consumer debt? Or a student loan? Or bought an investment property that cash flowed to supplement your monthly income? Let's have a conversation about whether or not it might be beneficial for you.