As home prices continue to soar, homeowners are now sitting on a record $ 22.7 trillion in equity, the highest amount since data was first recorded in 1945 , according to a LendingTree report. The publication conducted a survey that found that while people haven’t leveraged too much home equity these days, it wouldn’t have a noticeable impact on their credit scores.
According to LendingTree, more than 1,500 home equity loan applications in 40 of the nation’s largest metropolitan areas surveyed had a relatively small impact on their credit rating. In addition, these downgrades in borrower credit scores typically rebound in less than a year.
“Borrowers in the 40 subways analyzed in the LendingTree study saw an average drop of 17.5 points in their credit score in the months following a home equity loan,” according to the survey results. “At the high end, the scores are down about 26 points in Orlando, Fla., And at the bottom, they are down just under 9 points in Kansas City, Missouri.”
When it comes to how quickly ratings rebounded, the survey found that credit scores typically reversed in 96 days on average, from their lowest point to pre-loan levels. Residents of Austin, Texas saw their credit scores rebound the fastest with a 70.5-day delay. Meanwhile, borrowers in Memphis, TN had the longest payback time of 127.9 days, according to the report.