Greenbook: A Local Guide to Chesapeake Living - Issue 3 | Page 43

HELOCs
Being Put to Better Use
DAILY REAL ESTATE NEWS | TUES., DEC. 02, 2014

Home equity lines of credit are
becoming one of the fastest-growing
segments in the mortgage market,
but home owners appear to be using
the money more responsibly than they
did before the housing crisis, the Los
Angeles Times reports.
During the first half of the year,
HELOCs climbed 21 percent
compared to the same period last
year, according to credit bureau
Equifax. Home owners borrowed
$66 billion against their equity —
which they are gaining thanks to
rising home prices and historically
low interest rates — during the first
half of this year, and lenders extended
670,000 new HELOCs during that
time. That marks a six-year high
for both measures, according to
Equifax.

HELOCs were once thought of as a
convenient source to tap for cash
when you needed it, but home owners
indicate that they are putting the
money to good use now. Slightly
more than half of 1,346 home owners
recently surveyed by TD Bank say
they are using or have used their
HELOCs to pay for remodeling
projects that are likely to increase
the market value of their homes.
Projects cited include kitchen updates,
bathroom additions, new roofs,
and other remodeling projects.

paying medical bills (18%); kids' and
adults’ education costs (15%); travel
(15%); and small business investments
(13%).

Michael Kinane, TD Bank's head of
consumer and mortgage lending, says
home equity lines of credit are a "much
safer" financial product in 2014 than
in past decades. Most banks limit the
combined loan-to-value ratio, or the
total of the primary mortgage balance
plus the maximum amount they can
take out compared to their home
value, to 80 percent. Also, to qualify
for a HELOC, lenders are more
Another 29 percent of respondents
thoroughly reviewing documented
say they have used their HELOC
income, employment, credit, and
money to take advantage of interest
rates on financial products, consolidate property values.
debts, or pay off credit card balances.
Also, nearly a quarter of home owners
say they've used the HELOC money
to pay off emergency expenses for
unexpected events. The survey
identified other major uses of
HELOCs: buying new cars (27%);
GREENBOOK | SEPTEMBER - OCTOBER 2014

43