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December 10, 2014 4:21 am
While half of homeowners who have a home equity line of credit (HELOC) acquired the loan for home renovations, an increasing number of homeowners rely on the loan for other needs, according to a recent Consumer Borrowing Index survey from TD Bank. Research from over 1,350 U.S. homeowners with a HELOC provides insight into those needs, along with usage and perceptions of the loan.
"We're seeing an increasing interest in HELOCs this year, suggesting a rebound in consumer confidence related to rising home values," said Michael Kinane, Head of Mortgage and Consumer Lending Products, TD Bank. "Using this type of financing to add value to your property is a strategic move when it comes to today's real estate market. HELOCs currently offer consumers the convenience and flexibility to borrow what they need at a better interest rate than most other lines of credit."
A HELOC is secured by a consumer's home and typically requires 80 percent equity. According to the Index, 53 percent of homeowners report the value of their home has increased within the past few years, meaning consumers have more equity in their homes to borrow. The survey also revealed that 30 percent of homeowners are applying for a HELOC of $100,000 or more, though the average loan secured is only $87,000. Those who shopped around tended to get a higher value loan. Additionally, individuals who went with their primary financial institution but did consider other lenders secured an average HELOC of $92,000, or $5,000 more than those who only considered their primary financial institution.
According to the Index, the top motivators behind acquiring a HELOC are:
Published with permission from RISMedia.
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