If you bought or already owned a home last year, you were in luck because according to a new report, 2015 was a good year to own a home. Why exactly? Home equity rose and mortgages were lower.
The report by the Federal Reserve Bank of New York found that on average, Americans paid 8 percent less on their mortgages in 2015 than they did in 2008. While this drop occurred, the amount of principal paid off rose by 41 percent. That means that homeowners last year paid less per month while their home equity rose. It sure was a good year to own a home!
“That’s a major increase in savings, and a major improvement in the balance sheets for these households,” says Andrew Haughwout, a senior vice president at the New York Fed.
The report gave statistics for mortgages. According to the American Banker about the report, “the amount of mortgage principal paid down by homeowners totaled $288 billion last year, up by $118 billion from 2006, although the total amount of mortgage debt outstanding was the same in both years.”
The American Banker attributed that to low borrowing costs, prompting homeowners to refinance to less expensive loans. Borrowers took less equity out of their homes than they did ten years ago. There was also a a smaller pool of highly leveraged homeowners because of foreclosures during the financial crisis.
For these various financial reasons, 2015 was a good year to own a home. Still own one or looking to buy your first home? 2016 will be great too! So far in 2016, we have seen low mortgage rates, making it still a great time to buy. The success from 2015 also indicates how well the economy is doing, and that success and strength should continue into this year. Take advantage of the good times and check out RE/MAX Paradise’s properties today!