Survey: Most Homeowners Open To Using HELOCS For Home Improvements

Posted by Patrick Barnard on February 16, 2016 No Comments
Categories : Residential Mortgage

A survey recently conducted by mortgage lender TD Bank reveals that nearly 60% of U.S. homeowners would use a home equity line of credit (HELOC) for home renovations.

Additionally, 56% believe their homes’ values have increased. With rising property values, homeowners are increasingly optimistic and ready to re-invest in their homes, the survey reveals.

TD Bank’s research shows that homeowners are attracted to HELOCs because the loans allow them to borrow as needed over time (32%) and provide greater flexibility for use of the loan (24%).

Interest rates are the biggest factor (57%) in choosing a HELOC, followed by trust in the lender (23%), the study reveals.

However, many homeowners remain uncertain and confused about the terms and conditions of a typical HELOC. Millennials, however, claim they have a good understanding of HELOC terms.

“With ongoing home price increases, homeowners will see progress in home equity, which should facilitate investment in renovation,” says James Marple, senior economist with TD Bank, in a release.

“Consumers have been reluctant to start home renovations in recent years because of all the uncertainties in the economy,” adds Mike Kinane, senior vice president, home equity, for TD Bank. “It’s encouraging to see a growing appetite for these projects. A HELOC can be an attractive way to finance renovations. HELOCs give homeowners the flexibility to borrow needed funds over time, during the renovation process, and then offer an interest-only repayment option throughout the draw period which is typically 10 years.”

So what home improvements did most survey respondents say they would use a HELOC for? Perhaps not surprisingly, about 42% say they would use the money for a new kitchen while about 25% say they would use it for new bathrooms.

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