Nearly half of homeowners say they have plans to renovate their home in the next two years, and a third of those intend to drop $50,000 to do it.
This is according to a recent survey from TD Bank, which polled more than 1,800 homeowners to examine trends in home equity usage.
One startling fact? A quarter of those surveyed could not define a HELOC (home equity line of credit). And, one-third said they did not know how much equity they had in their home.
Americans have an average of $113,000 in equity in their homes, TD Bank revealed, but most don’t have plans to tap it.
Instead, the survey revealed that most homeowners plan to dip into their personal savings to finance renovations, with that option being the choice of 48% of respondents.
Using cash saved in a checking account was next at 34%, while borrowing funds through a HELOC was the preferred financing method for 24%. Taking out a personal loan came in last at 18%.
Jon Giles, head of Home Equity Lending at TD Bank, said that despite this preference not to finance using home equity, HELOC is one of the most affordable ways to borrow.
“We’ve found that many homeowners simply aren’t aware of how they can leverage the equity in their homes,” said Giles. “Home equity financing is ideal for projects that will add value to one’s home, such as a renovation. It’s also frequently tapped to consolidate higher interest rate debt, or to help with education expenses.”