Mortgage Equity Withdrawal (MEW)

Written by:
Image
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated September 30, 2020

What is a Mortgage Equity Withdrawal (MEW)?

A mortgage equity withdrawal (MEW) is a loan that uses the value of a mortgaged property as collateral.

How Does a Mortgage Equity Withdrawal (MEW) Work?

When a property is worth more than is owed on it, it has positive equity. If this occurs, the equity may in some cases be used as collateral for an MEW.

For example, suppose Bob has a $75,000 mortgage balance on his home. His home's market value is $120,000. Bob may be eligible to obtain an MEW up to $45,000 ($120,000 market value - $75,000 mortgage balance = $45,000 in equity). If Bob obtains an MEW of $10,000, the value of his equity is reduced from $45,000 to $35,000.

Why Does a Mortgage Equity Withdrawal (MEW) Matter?

MEWs can be used to withdraw cash from what is generally considered an illiquid asset. However, there is risk that the mortgaged property will decline in value once equity is withdrawn. Should this occur, it is possible that the balance on the mortgage could exceed the market value of the mortgaged property, known as being "underwater."

Ask an Expert about Mortgage Equity Withdrawal (MEW)
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Mortgage Equity Withdrawal (MEW).
Be the first to ask a question

If you have a question about Mortgage Equity Withdrawal (MEW), then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Mortgage Equity Withdrawal (MEW), then please ask Paul.

Ask a question Read more from Paul

Read this next

Don't Know a Financial Term?
Search our library of 4,000+ terms
Paul Tracy - profile
Ask an Expert about Mortgage Equity Withdrawal (MEW)

By submitting this form you agree with our Privacy Policy

Share
close