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Why owners seek HELOCs

House prices in many parts of the country have increased dramatically since the start of the pandemic in the middle of 2020, which has seen many homeowners see the amount of equity in their homes increase.

According to LendingTree Principal Economic Analyst Jacob Channel, there are many reasons why someone would consider tapping into their home equity. On average, 23.96% of homeowners have considered improving their home equity to help consolidate some form of debt. Home equity lines of credit (HELOCs) often come with lower rates than other types of financial liability like credit cards because using one to pay off high-cost debt can help borrowers save money. ‘silver.

Using a home’s equity for non-home improvement investment purposes was the primary goal for an average of 9.16% of homeowners. Only 1.43% of consumers plan to use their home equity as retirement income. Retirees who have generated considerable equity in their home might show an interest in tapping into it as a temporary way to boost their income.

As the data analyzed home equity loans or HELOC offers made by lenders to LendingTree users throughout 2021, LendingTree was able to determine the popularity of each of these reasons in the 50 largest metro areas nationwide. The top reasons cited by respondents for taking out a HELOC included:

  • Make home improvements;
  • debt consolidation;
  • Obtain money for investment purposes not related to home improvement;
  • Obtain additional retirement income; and or
  • Use the money for another reason.

On average, 48.59% of people looking for a home equity loan or HELOC in the nation’s 50 largest metros said home improvements were the top reason for tapping into the equity in their home. property, the reason most often given in each metro. according to LendingTree.

A significant percentage of homeowners, an average of 16.85%, considered a home equity loan or HELOC for a reason other than those listed above.

Regionally, the study found that the metros with the highest share of homeowners tapping into their home equity for home improvements were:

  • Boston, MA (54.33%)
  • Philadelphia, Pennsylvania (52.96%)
  • Milwaukee, Wis. (52.78%)

The metros where the largest proportion of homeowners tapped into their home equity for debt consolidation included:

  • Las Vegas, Nevada (31.82%)
  • Phoenix, Arizona (28.27%)
  • Louisville, Kentucky (28.04%)

Metro areas where the highest proportion of homeowners were considering leveraging their home equity for non-home improvement investment purposes included:

  • San Jose, California (16.95%)
  • Miami, Florida (14%)
  • Austin, TX (13.08%)

Metros that found the largest share of homeowners tapping into their home equity for retirement income:

  • Las Vegas, Nevada (2.50%)
  • Los Angeles, California (2.16%)
  • Miami, Florida (2.08%)

Metros where the largest share of homeowners have considered tapping into their home equity for another reason:

  • San Jose, California (24.13%)
  • Los Angeles, California (21.11%)
  • San Francisco, California (21.05%)

Click here for more information on LendingTree’s HELOC analysis.