It looks like HELOCs are about to rise. According to a new survey, nearly half of all homeowners have a Home Equity Line of Credit on their radar, with 42 percent saying they’re somewhat, very or extremely likely to apply for one in the next 18 months.
HELOCS, home equity jump
Lenders that offer HELOCs are in luck. According to TD Bank’s Spring Home Lending Survey, almost half of homeowners are thinking of taking out a Home Equity Line of Credit in the near future.
It’s no surprise either. Homeowners have more equity to pull from than they have in a while, and according to the survey, 69 percent of homeowners have seen their home equity increase over the last 18 months.
But the downside? Most of those homeowners don’t exactly know what a HELOC is or how to use one.
According to the survey, a whopping 57 percent are only somewhat, not very or not at all confident in their understanding of HELOCs. Another 29 percent didn’t even know they could use HELOCs for non-home related expenses, like college tuition or debt consolidation.
Considering a HELOC
When it comes to taking out a HELOC, potential borrowers say they’re most concerned with the interest rate they’ll get. Total loan amount, fees and the trustworthiness of the lender also ranked high.
As for why they’d consider a HELOC, it seems most homeowners like the ability to borrow as needed – rather than a set, large amount.
Other homeowners are drawn to the low-interest rates, particularly compared to credit cards and other forms of credit, as well as the HELOC’s ability to help cover home renovations, repairs and upgrades.
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