Real Estate

Home equity loan vs. cash-out refinance: pros and cons


Many Americans are suddenly house rich. On paper, anyway.

Soaring home prices have resulted in a record amount of home equity on hand. By the end of last year, roughly 46 million homeowners held a total $7.3 trillion in equity to tap, the largest amount ever recorded, according to Black Knight, a mortgage technology and research firm — the equivalent of roughly $158,000, on average, per homeowner.

That, along with near rock-bottom mortgage interest rates, drove a growing number of borrowers to take money out of their homes.

In the first quarter of 2021, the amount of home equity cashed out rose to $49.6 billion — the highest level since 2007, during the last housing boom. Including…


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