New loan option allows cash-strapped homeowners to tap into their housing wealth
Rocket Mortgage, the nation’s largest home lender, has launched a home equity loan product that aims to help Americans grappling with credit card debt.
The new offering enables homeowners to access $45,000 to $350,000 of their home’s equity in 10- or 20-year term, fixed-rate loans while maintaining at least 10% equity in their home. Rocket Loans, the company’s sister company, also offers smaller loan amounts of around $2,000 to $45,000.
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Rocket Mortgage CEO Bob Walters claims the home equity loan helps clients “improve their lives by having a payment they can more comfortably afford.”
“Our goal is to consistently create financial products that help our clients achieve their goals,” he said. “In the current market, short-term interest rates have risen sharply – making it much harder to pay off credit card debt. Rocket’s talented technology, product strategy and capital markets team members came together quickly to develop this important mortgage product, demonstrating the power of the tech platform at Rocket Companies.”
According to ATTOM, 45% of mortgaged residential properties in the US were considered equity-rich in the first quarter, up from 41.9% in the previous quarter. At the same time, the country’s total household debt stood at $15.84 trillion in Q1, and credit card balances were $71 billion higher than in 2021, Rocket said, citing data from the Federal Reserve Bank of New York.
“Homeowners continue to benefit from rising home prices,” said Rick Sharga, executive vice president of market intelligence for ATTOM. “Record levels of home equity provide financial security for millions of families and minimize the chance of another housing market crash like the one we saw in 2008. But these higher home prices and rising interest rates make it extremely challenging for first-time buyers to enter the market.”
