Equity Rich, Cash Poor, and Black; Prime Target for Equity Stripping
By DeShawna Whitmore
It has been a great run for home equity. In Las Vegas, Nevada, home values appreciated more than20% on average in 2021 alone! That means the average homeowner in Las Vegas stood to makeequity gains in excess of $75,000 in a single year. This has homeowners seriously consideringcashing out their equity. How and why homeowners take out equity from their primary homematters. This is especially important for Black homeowners because the housing industry has ahistory of stripping their home equity and leaving them barren and without wealth to pass on.Homeownership has long been considered a cornerstone of stability and wealth generation inAmerica. It is the gains in home equity that can significantly impact financial security.
Unfortunately,virtually all the gains Black homeowners made since discrimination was outlawed in 1968 and werewiped out in the 2008 housing crisis; where Black homeowners were 70% more likely to getforeclosed on compared to white homeowners. Recently, home equity has been rapidlyaccumulating for many homeowners and for Black homeowners still out there. That mean the onslaught of advertising by lenders and others to get a piece of their equity is in full effect.
Homeowners must carefully consider the slew of financial offers bombarding them before acting onany one of the options. From refinancing to equity sharing, HELOCs (Home Equity line of Credit) toReverse Mortgages, knowledge is key. Each financial product has its pros and cons, andunderstanding how that affects the individual homeowner is critical. Without understanding, theequity in the home, along with it the key benefits of homeownership, can easily be stripped away byerroneous fees, high interest rates, and high stakes.
While accessing equity and cashing in on the value built in a primary residence is not all together abad idea, it is very important to have a plan for that money and to understand the cost associatedwith accessing it. Refinancing can be a great opportunity to lower the mortgage interest rate and orremove the mortgage insurance premium. A cash-out refinance or equity sharing, can be a viableway to make home improvements. A reverse mortgage can be used to keep seniors living in theirown home comfortably. These options can also lead to financial ruin and even foreclosure.
Before making any moves that will affect long-term wealth and stability, check out the libraries oftools and information for consumer education offered by The Consumer Financial ProtectionBureau (CFPB), The U.S. Department of Housing and Urban Development (HUD), and The FederalReserve Board (FRB) and speak with a trusted, qualified professional that can help map out thebenefits, pitfalls, and costs of accessing home equity.
DeShawna Whitmore | REALTOR® | NV License #S.0070482.LLC | Realty One Group, Inc. | www.moreLVrealty.com | Dir: 702-743-5646
For over 15 years, DeShawna has been gladly sharing her knowledge and experience with other real estate enthusiasts and neighbors alike
