As home prices rise, homeowners are starting to realize they may be sitting on substantial amounts of equity. That has prompted more of them to consider a home equity loan or home equity line of credit in 2021.
Fifty percent of homeowners seeking a HELOC across 50 metros cited home improvements for their primary reason, according to a new study from LendingTree. More homeowners have been seeking to spruce up or remodel their homes since the pandemic began. The metros where the largest share of homeowners are considering tapping into home equity for improvements are Boston, Philadelphia, and Milwaukee, the survey finds.
Twenty-four percent of homeowners say they’re considering using their home’s equity to help consolidate their debt. Home equity loans and HELOCs tend to come with lower rates than other types of debt, such as credit cards, so borrowers may be tempted to pay off the high-cost debts with HELOCs. The metros with the largest share of homeowners considering using home equity for debt consolidation are Las Vegas, Phoenix, and Louisville, Ky., according to the LendingTree survey.
Less than 2% of homeowners say they are considering using their home equity as retirement income, one of the least popular reasons to take out such a loan.
LendingTree analyzed the most popular reasons to consider home equity loans or HELOCs by metro.