40% of underwater borrowers took cash out of homes by Inman News

By
Real Estate Agent with Starlight Realty Certified REO & Short Sale Specialist

CoreLogic: Owners with home equity loans more than twice as likely to be upside down

Inman NewsTM

Homeowners with home equity loans are more than twice as likely to be "underwater" as those who didn't take cash out of their homes, according to statistics compiled by real estate and loan data aggregator CoreLogic.

CoreLogic estimates that at the end of March, 22.7 percent of homeowners with mortgages -- about 10.9 million borrowers -- owed more on their mortgage than their home was worth. That's down slightly from an estimated 11.1 million underwater borrowers at the end of December.

Falling home prices can put borrowers who have little equity in their homes underwater. By allowing homeowners to convert equity they have in their homes into cash, home equity loans reduce the cushion borrowers have against price declines.

CoreLogic said that 38 percent of borrowers with home equity loans were underwater at the end of March, compared with 18 percent of homeowners who had no home equity loan. More than 40 percent of all underwater homeowners (4.5 million) have home equity loans, CoreLogic said.

Comments (1)

John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Sengdao - Some home owners use their as piggy bank. Thank you for the detailed quality blog about some home owners took cash out of homes.

Jun 11, 2011 05:01 PM