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HOMEOWNERS TAPPING
INTO HOME EQUITY AS
SOURCE OF CASH
With house values mounting and the
economy mending, the home equity loan
market has secured a toehold over the past few
years. So why do folks opt for a home equity
loan over a personal or another type of loan?
To gauge an understanding of current
customers' perspective, LendEDU posed 15
such questions to a group of 1,000 Americans
who are home equity loan borrowers. ey
also asked participants' opinion of the tax code
changes, with surprising answers.
e survey found that 52.2 percent of
survey respondents are utilizing home equity
loans to bankroll home improvements since
they are usually the least costly source of
funding for fixer-upper projects.
e survey indicated that 23.3 percent
used their home equity loan primarily to
consolidate debt. at's likely because home
equity loans typically offer lower interest rates
than credit cards, student loans, personal
loans, and car loans.
On a bright note, 83.8 percent of poll takers
thought the value of their home would grow
over the next three years, the survey noted.
Just a teensy bit fewer—81.9 percent—believed
their home's value would rise over the next five
years.
When asked what they thought the value
would be later on down the road, however,
the numbers dipped to 74.1 percent expecting
it will be more valuable in 10 years and 65.2
percent said that their place of residence would
be more valuable in 20 years.
As for the changing tax law we mentioned
earlier, most people don't understand it,
the survey reveals. A mere 4.4 percent of
respondents correctly identified that the
law would be detrimental to home equity
loan borrowers by eradicating the interest
deduction. And that, the survey found,
could deal a blow to the home equity lending
business.
