HELOCs on the rise amid high interest rates
Jul 28, 2023, 6:00 AM
Homes line the horizon in Daybreak in South Jordan on Wednesday, July 13, 2022. (Jeffrey D. Allred/Deseret News)
(Jeffrey D. Allred/Deseret News)
SALT LAKE CITY — A new study by the Mortgage Bankers Association found that there was a rise in Home Equity Lines of Credit, HELOCs, in 2022.
HELOCs allow homeowners to borrow money based on the equity they have in their homes.
Vice President of Mortgage Lending for Mountain America Credit Union Kara Loftus said that she’s also seen a big increase in the number of people seeking HELOCs.
“Homebuying is down. Purchases are down in the state of Utah and it’s because people just have a better rate on their first mortgage that they are not willing to give up. But with the increase in value, they have so much equity that they can tap into,” said Loftus.
Reasons to use HELOCS
Mortgage rates are through-the-roof and credit card rates are following suit.
People who previously wanted to buy a home, are instead using their equity to remodel or add on to their current homes.
You don’t have to use HELOCs specifically for your home, you can use them for almost any purpose, Loftus said. Many are using the extra cash just to battle inflation.
Be smart
However, it’s important to be a smart borrower, Loftus advised.
Some HELOCs have variable rates, others have interest-only payments.
So if you’re one of the many who are hopping on the HELOCs bandwagon, Loftus said to make sure you fully understand the terms of your loan.
