What is Mortgage Equity Withdrawal?

Mortgage equity withdrawal is the amount of money that customers can essentially take out of their homes. Here are the basics of mortgage equity withdrawal and how it works.

Mortgage Equity Withdrawal

Mortgage equity withdrawal is a term that is used to describe the money that people get as a result of tapping the equity in their homes. This could be done by refinancing an existing mortgage and collecting the difference between what is owed, and the value of the home. Another way to access the equity in a home is to utilize a home equity loan. In this case, the entire amount of the home-equity loan would represent the mortgage equity withdrawal.

Economic Factors

Mortgage equity withdrawal is a closely monitored statistic in the economic world. Mortgage equity withdrawal tends to fluctuate with the changes in the economy. Many economists try to predict how much of mortgage equity withdrawal will go into consumer spending and how much will be saved. Much of the money that is withdrawn from home-equity also goes towards paying off other debts. Therefore, you will see people take out money from their home-equity and use it to pay down credit card balances, student loans, and other types of debt.