Tag Archives: home equity loan

Using increasing home equity to pay off other debts

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The investment many Americans have made into houses or housing units has another benefit: helping residents pay off other financial obligations.

Photo by Pixabay on Pexels.com

Americans continue to spend freely, keeping the economy humming, even as they amass more credit card debt. But like Ms. Boroski, many homeowners have built up a nest egg to help pay for their lifestyles: $35 trillion in home equity, a record high…

Household debt increased 3 percent in the first quarter of 2026, to $18.8 trillion, from a year earlier, according to a report from the Federal Reserve Bank of New York, using data not adjusted for inflation. Mortgages made up the biggest chunk of that total, but credit card balances climbed 6 percent to $1.25 trillion from the year before.

In the same three months, homeowners withdrew an estimated $47 billion in equity, up 2 percent from the same period in 2025, according to a report from the Intercontinental Exchange, a financial services company. Second mortgages amounted to $25 billion, a 1 percent increase from a year earlier, but refinancing existing mortgages to take cash out jumped 18 percent year over year to $22 billion…

Financial brokers are seeing more refinancing activity across the country, as more people seek to pull themselves out from under a pile of bills.

This is a possible outcome when so many housing values have risen in recent years. Of course, that larger housing value is just a number until someone sells (or property taxes are due).

It also highlights those who cannot access this financial cushion. This includes people who cannot purchase housing in the first place or people who do not have much equity.

And, perhaps the most important feature is in the first paragraph above: “Americans continue to spend freely.” Some of this is on required items for day to day living. Costs keep going up. Yet, the linked article suggests: “there are hints that more Americans are taking the opportunity to spend more on what they want, not just what they have to buy.” If consumption is both a way of life and an essential part of the economy, looking for ways to leverage assets to keep it all going becomes helpful or even necessary.

Sign here, and here, and here…

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You probably don’t thoroughly read contracts you are asked to sign (or click through).  But lest you think that lawyers read through things they are asked to sign in everyday life, Above the Law is reporting that even the legendary Judge Richard Posner [bio] didn’t read his home equity loan contract, much to the amusement of the audience at the panel where he made his confession.

I suppose Posner should be grateful that his bank didn’t take his soul as part of the deal?  (Don’t laugh–it happened to 7,500 customers of a British computer game retailer earlier this year.)

As amusing as such stories may be from a news perspective, they clearly raise troubling questions about the sacrosanct role of contracts within our society.