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Credit Card Debt and Your Home Equity

By January 13, 2020July 13th, 2020Econ News, Financial Tips, Mortgage Tips
Home Equity Real Estate Credit Card Debt Paramount Bank Seller Market Zillow Research Experian Credit Scores American Debt Conventional Home LOans

American consumers are accruing more credit card debt each year, according to credit reporting agency Experian.

Homeowners are in a unique position, particularly if home equity value far exceeds credit card debt.

Let’s break down credit card debt rates today and how Paramount Bank can help you leverage home equity.

Credit Card Debt Across America

Experian’s data suggests the average credit card debt across Americans ranges between $5,000 and $7,500 per consumer.

Midwest buyers are averaging lower debt limits than borrowers on the East Coast. At the same time, fewer borrowers are behind on payments.

In addition to lower delinquency rates, credit scores are averaging higher each year than at the point of the 2009 U.S. financial recovery.

Banks are seeing the trend in good consumer behavior and reward borrowers with higher credit limits. The average credit limit for borrowers with a credit score of 800 or above is over $13,o00 per card. Borrowers between 670-739 credit scores, or right in the median, are receiving an average of $7,478 limit per card.

Homeowners Home Equity Value

November 2019 yielded continued growth for U.S. Homeowners.

Zillow published an estimate of 3.8% home value increase year-over-year from November 2018 to 2019 – suggesting stabilization but re-acceleration in quarterly growth.

The average home value is over $243,000 per home. Combined with the continued growth and lower inventory, there is plenty of incentive for current homeowners to tap into home equity.

Home Equity Loans to Tackle Credit Card Debt

Homeowners who are trying to move in the next few years are in a good position to use higher credit card limits with their home equity.

For example, John Homeowner is interested in putting his home on the market. His goal is to have a listing by the end of 2020 and a buyer early next year.

John researches his neighborhood to see homes being sold with newly renovated bathrooms and kitchens. While the kitchen is in good shape, the bathroom leaves a lot to be desired.

Savvy home owners like John can use their credit cards to responsibly purchase and undertake home improvement projects. Once complete, John could take out a new home equity loan to pay off the credit card debt and lower his monthly mortgage payment.

Tapping into home equity for improvement projects are just one of the many ways a borrower can take advantage of their real estate value.

For more home ownership solutions, check out Paramount Bank’s refinance products. If you’re ready to start taking advantage of your home equity, call us today.

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