REAL ESTATE REPORT

North Texas home prices have seen some of the biggest gains in the nation during the last few years.

And homeowners who are sitting on top of billions of dollars of new equity are pulling some of it out.

Plano homeowner Sam Schwartzberg — who’s seen the value of his house near Preston Road soar by $100,000 in the last four years — just did a cash-out refinancing to pay for home improvements.

“It’s major — master bath, kitchen, new tile in two bathrooms,” said Schwartzberg. “My wife wanted to buy a new house and move to Frisco. I didn’t want to move from Plano.

We’re in a fabulous location.”

Texas cities have some of the highest home equity rates in the country, according to studies by CoreLogic.

Median home prices in the Dallas-Fort Worth area are more than 50 percent higher than they were five years ago.

CoreLogic estimates that the average D-FW home gained $20,000 in equity in 2016 alone. So it makes sense that some homeowners want to tap into all that wealth.

“This past month, cashout [refinances] were 48 

percent of our business,” said Rodney Anderson of Supreme Lending. “People have gotten lucky with appreciation, and it’s time to tap into that.”

Credit card debt

Anderson said home improvements are one of the most popular reasons to pull equity out of a house. But a lot of his customers are also trying to reduce high-interest-rate personal debt.

“Every single day I see at least five to 10 people who have at least $50,000 in credit card debt,” Anderson said. “I have people who have Wal-Mart credit cards that owe 12 grand.

“It’s truly a real opportunity to take high-interest-rate debt and restructure.”

But he also finds some borrowers who are back in the same condition two years later, having run up credit cards again.

“They are using their house like an ATM machine — something I advise people against,”

Anderson said.

U.S. trend

Frank Nothaft, chief economist with CoreLogic, said it isn’t just North Texas homeowners who are doing more cash-out refinancing.

“We have seen this trend in others markets as well,” Nothaft said. “The other phenomenon is a pickup in home equity line-of-credit volume, too.

“Some owners prefer to keep their low-rate first mortgage and tap into equity with a home equity line of credit,” he said. “Volumes are still much smaller than in the 2005- 2006 period.”

Loose lending in the early 2000s fueled the housing bubble that contributed to the Great Recession. Residential lenders are being more cautious in approving debt loads for consumers.

“For those that are taking advantage of the low home equity rates to pay off existing credit card debt, I suggest only doing so if they strongly believe that they will not need to rely on credit cards for financing in the near to distant future,” said Mark Raskin of PrimeLending.

“Having a fresh start without large sums of unsecured, high-interest credit card debt many times allows families the opportunity to not only maintain a sensible overall budget but also save for future needs — college funds, retirement, etc.”

Twitter: @SteveBrownDMN