A majority of homeowners recently surveyed indicated they are unlikely to tap the equity in their homes — even to payoff high-rate debt. However, many who are considering making home improvements are considering home equity financing.
TD Bank, the U.S. subsidiary of Toronto-Dominion Bank, released the results of its HELOC Trend Watch, a national survey it conducted of 1,813 homeowners. According to the report, most homeowners (87 percent) say they have had an increase in equity since purchasing their residence.
But a majority (52 percent) of the respondents who either previously had home equity financing or are aware of home equity products consider themselves not at all likely, or not very likely, to consider applying for a cash-out second mortgage in the next 18 months.
For homeowners with non-real estate debt, 65 percent would be interested in consolidating that debt at a lower interest rate. But a third of this group is uncomfortable using their home’s equity and prefer a personal loan.
TD Bank noted that home renovations are one of the most common use of funds for home equity lines of credit and home equity loans, and 43 percent of those considering home improvements intend to utilize a HELOC or HEL to finance them.
“Many Americans have more equity in their homes than ever before, so utilizing it to their advantage may make financial sense,” TD Bank Head of Consumer Direct Lending Jon Giles (pictured above) said. “When used responsibly, HELOCs and home equity loans are effective, affordable tools which can assist in paying down higher interest debt, covering education costs or allowing for home renovations, which add value to the property.”