The how behind HELOCs
Home equity topped $1 trillion in the U.S. last month, and American homeowners are certainly taking advantage of it. According to a new study, Home Equity Lines of Credit (HELOCs) are becoming especially popular – especially among homeowners in the Midwest.Verify your new rate (Jul 12th, 2020)
HELOCS for home improvement
LendingTree recently analyzed HELOCs, including the reasons behind these lines of credit, the age of the homeowner, their location and other details. Undeniably, home improvement came out as the top purpose for taking out a HELOC, accounting for 42.9 percent of all applications.
Home improvement HELOCs are most popular in the Midwest part of the country, with a full 50 percent of applications deemed for home improvement. Other Midwestern cities to also show high shares of home improvement HELOCs were Kansas City, Missouri; Pittsburgh; and Indianapolis.
Boston; Buffalo, New York; Baltimore; Virginia Beach, Virginia; Cape Coral, Florida; and Sacramento, California, also showed high percentages of home improvement HELOCs.Verify your new rate (Jul 12th, 2020)
Other reasons for HELOCs
Debt consolidation came in at second, with a 38.2 percent share of applications. Investment purposes accounted for about 8 percent of HELOC applications, while retirement funding made up a 1.3 percent share. Just 0.2 percent of HELOCs were for emergency expenses.
The top city for debt consolidation HELOCs was Raleigh, North Carolina, though many other top-showing towns were in the West. Las Vegas, Seattle, Phoenix and Riverside, California, also made the list of top spots for debt consolidation.
HELOCs for investment purposes were most popular along the coasts, with San Jose, California; Miami; Austin, Texas; San Francisco; and Los Angeles make up the top five. Half of the top cities for retirement HELOCs were in Florida.
All in all, HELOCs can be a “valuable source of funds for life events,” according to Tendayi Kapfidze, LendingTree’s chief economist.
“Because these loans are secured by an asset, the borrower’s home, they tend to offer lower rates than more expensive forms of borrowing, such as personal loans or credit cards,” Kapfidze said. “And there’s a tax benefit — homeowners can deduct the interest paid on HELs up to certain amounts so long as they use them to buy, build or make substantial improvements to their home.”
Get today’s mortgage rates
Want to take out a HELOC for your financial goals? Then shop around and see what rates you qualify for today.Verify your new rate (Jul 12th, 2020)