Summary: Homeowners across the country are sitting on record equity while credit card costs and everyday expenses stay high. This guide walks through what equity is, three ways Southern California homeowners use it well, the mistakes to avoid, and a simple yearly checkup you can do with me for free.
If you own a home in Murrieta, Temecula, Menifee or anywhere in Riverside County, there is a good chance you are holding more wealth in your walls than you realize. Most of us don't think about it because it doesn't show up on a monthly statement. But once a year it is worth looking, and this month is a good time to do it. Here is the market backdrop, and then a plain-English guide to using that equity wisely.
What is going on in the market this month
As November begins, mortgage rates are at their best level in more than a month, according to Mortgage News Daily. They are still well above where they sat a few years ago. The Federal Reserve left its policy rate alone at its October meeting, and some Fed officials have since argued for raising it again when they next meet in December. Inflation is also still running above 3% for the year by the measure the Fed watches most closely. The short version: nobody should build a plan around rates dropping soon.
Closer to home, the September report from the California Association of Realtors showed a statewide median home price near $900,000, with Riverside County's median around $620,000 and sales down from a year earlier (C.A.R.). In plain English: it is a slower market, prices are holding, and a lot of owners have decided that selling and trading into today's rates doesn't make sense.
That is exactly why equity is the story.
How much equity are homeowners holding?
According to ICE Mortgage Monitor, U.S. mortgage holders have a record of roughly $18 trillion in home equity, and about $11.7 trillion of that could actually be borrowed against while still leaving a healthy cushion in the home. That works out to roughly $212,000 per borrower on average. Your own number depends on your home's value, your loan balance and your lender's guidelines, but the national picture says many owners have more options than they think.
At the same time, households are carrying a lot of non-mortgage debt. The New York Fed's latest household debt report showed credit card balances above $1.2 trillion and auto loan balances above $1.7 trillion. Credit card interest rates remain near the high end of their range, per Bankrate. That combination, large equity on one side and expensive debt on the other, is where a good plan can make a real difference.
Three smart ways homeowners use equity
1. Consolidating high-cost debt with a real payoff plan. If you are carrying credit card or auto balances that cost you a lot every month, using equity to replace them with a single fixed, planned payment can free up monthly cash flow. The key word is plan. Consolidation only works if the cards stay at zero afterward and you have a written payoff date. When we work on this together, I map out your current monthly obligations, show the cash-flow difference side by side, and make sure the plan fits your budget, not just the math. You can read more about the options on our home equity and HELOC page.
2. Staying put and improving the home. Many Murrieta and Temecula owners bought or refinanced at a low first-mortgage rate and don't want to give it up. If you also can't or won't sell, using equity to fund a new roof, a kitchen, solar-ready electrical work or a pool can make your home work harder for your family while keeping the first mortgage exactly where it is. Borrowing against your equity on its own often costs less overall than refinancing your whole mortgage. If a backyard project is on your list, our pool financing page explains how that typically works.
3. Building a safety net or investing in your future. Some homeowners set up a line of equity simply as a cushion for emergencies, a home repair, or a family need, and borrow only if they need it. Others use equity toward education costs or a business. These are personal decisions and they come with risk, so they deserve a conversation, not a rule of thumb.
Mistakes to avoid
Equity is powerful, which is exactly why it deserves respect. A few mistakes I see:
Treating your home like an ATM. Borrowing for things that lose value, such as a vacation or a depreciating vehicle, can leave you with a longer-term obligation for a short-term benefit.
Consolidating without changing the habit. If the card balances come back, you have the old debt and the new one. Build the payoff plan first.
Ignoring variable-rate features. Some equity products have rates that can move. In a period when Fed officials are openly discussing further increases, it is worth asking whether a fixed option or a planned payoff timeline fits you better.
Only looking at the monthly payment. Compare the total cost, the term, any fees, and how it interacts with your first mortgage. A lower payment stretched over many more years is not always a win.
Waiting for a "perfect" moment. Nobody can predict where rates or prices go next. A plan that works at today's conditions and that you can live with if conditions change is a better test.
Your yearly equity checkup
Once a year, I suggest every homeowner run through five quick questions:
What is my home likely worth today, and what do I still owe?
What non-mortgage debt am I carrying, and what does it cost me each month?
Is my current mortgage still working for me, or is there a reason to look at a refinance?
Do I have a plan for any big expense in the next one to three years: roof, remodel, pool, college, a move?
If my income or expenses changed, would I be comfortable with my monthly obligations?
If you can answer all five confidently, you are in good shape. If one or two are fuzzy, that is what a free review is for. You can start with our Financial Health Scorecard, which takes a few minutes and gives you a clearer picture of where you stand.
What this means for you
You may have more equity than you think, and a short review will tell you for sure.
If expensive card or auto debt is squeezing your monthly budget, a planned payoff can help, but only with a written plan.
If you love your low mortgage rate, you may be able to keep it and still fund home improvements separately.
Rates and Fed policy may keep moving. Build a plan that works in today's conditions, not one that depends on a prediction.
Do the five-question checkup once a year, even when nothing is wrong.
Frequently asked questions
Does using home equity affect my first mortgage?
Usually a separate equity loan or line sits behind your first mortgage and leaves it untouched. A cash-out refinance, on the other hand, replaces it. Which one makes sense depends on your numbers, so it is worth comparing both.
How much equity can I actually borrow against?
Lenders typically let you borrow up to a portion of your home's value, minus what you owe, and the rules vary by loan type, your credit, and whether you live in the home. A quick review gives you a real figure for your home rather than a national average.
Is it a bad idea to tap equity when prices are flat or slipping?
Not necessarily, but it raises the importance of borrowing conservatively and keeping a cushion. Never borrow so much that a price dip or a change in your income would put you in a tight spot.
Let's look at your numbers together
And if part of your plan involves buying or selling, I am glad to introduce you to a great local agent — you can meet the real estate agents we trust on our Meet Our Partners page.
I would love to give you a clear, no-pressure look at your equity, your debt and your options. Book a free Discovery Call or take the free Financial Health Scorecard to get started.
Stephen Chakerian, NMLS #2193331. Barrett Financial Group, L.L.C., NMLS #181106. Equal Housing Opportunity. For education only; not a commitment to lend.
