{"id":21826,"date":"2025-10-09T16:27:01","date_gmt":"2025-10-09T16:27:01","guid":{"rendered":"https:\/\/incredipros.com\/?p=21826"},"modified":"2025-10-09T16:27:01","modified_gmt":"2025-10-09T16:27:01","slug":"is-home-equity-the-solution-to-record-high-debt","status":"publish","type":"post","link":"https:\/\/incredipros.com\/?p=21826","title":{"rendered":"Is Home Equity The Solution To Record-High Debt?"},"content":{"rendered":"
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Sometimes, two seemingly incongruous things can be true at the same time. For example, it\u2019s true that U.S. homeowners have amassed an extraordinary amount of home equity these days \u2014 roughly $34.5 trillion. And according to ATTOM\u2019s most recent home equity report, more than 47 percent of homeowners are \u201cequity rich,\u201d meaning that their homes are worth at least twice as much as they still owe on their mortgage.<\/p>\n

At the same time, it\u2019s also true that U.S. consumers have amassed a record amount of debt \u2014 $18.4 trillion at the end of the second quarter of 2025, according to a report from the Federal Reserve Bank of New York. Balances on auto loans, student loans and credit cards are all at or near historically high levels, even as interest rates have climbed, making that debt much more expensive to pay down.<\/p>\n

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Logically, a population with a record amount of equity might tap into those funds to pay down this record amount of debt.<\/p>\n<\/blockquote>\n

More troubling, the same report notes that delinquency rates on consumer credit payments have increased in nine of the past 10 quarters, and serious delinquencies \u2014 loans where payments are 90 or more days past due \u2014 are growing rapidly.<\/p>\n

Logically, it would seem that a population with a record amount of equity might tap into some of those funds, if they can, to pay down this record amount of debt. Especially since mortgage rates have recently come down into the low 6 percent range, while the average interest rate on a credit card is over 20 percent. But is that really the best solution?<\/p>\n

Traditional ways to access home equity<\/h2>\n

Historically, homeowners have tapped into home equity for a variety of reasons: making home improvements, funding higher education, investing in a second home, paying down higher-priced debt. The two most common ways of leveraging this equity have been home equity loans and home equity lines of credit (HELOCs).<\/p>\n

These products sound very similar, and in some ways, they are. But there are some fundamental and important differences between the two. According to the Consumer Financial Protection Bureau:<\/p>\n