Mortgage News May 24, 2023
According to the 2023 U.S. Housing Equity Loan Survey conducted by Accurate Group, individuals considering accessing their home equity are exploring alternative options and products more frequently than reverse mortgages.
According to the survey findings, when homeowners were questioned about their inclination to utilize their home equity in the future, 26% expressed a high or moderate probability of borrowing against it within the next year. Conversely, 51% indicated a low or very low likelihood of tapping into their home equity, while 23% remained neutral on the matter.
Among the individuals contemplating home equity lending options, a significant majority of 71% intend to pursue a Home Equity Line of Credit (HELOC), while 31% plan to opt for mortgage refinancing as their primary choice. In contrast, a mere 7% of respondents expressed their intention to obtain a reverse mortgage loan.
Based on the data provided by respondents, the survey highlights four primary factors driving consumers’ consideration of tapping into their home equity. The leading reason identified by survey participants is the loan’s interest rate (50%), followed by job security (41%) and the available amount of equity for borrowing purposes (40%). Additionally, the performance of financial investments was mentioned by respondents as a motivating factor (35%).
When asked about their primary motivations for considering a Home Equity Line of Credit (HELOC), respondents indicated that the leading reason would be for home improvement projects (35%). This was followed by using the funds to finance a significant purchase (15%) and to pay off high-interest loans (13%).
In evaluating the suitability of the Federal Housing Administration’s (FHA) Home Equity Conversion Mortgage program in comparison to alternative options for tapping into equity, the Urban Institute recently published a comprehensive analysis focusing on reverse mortgages and Home Equity Lines of Credit (HELOCs).
In an op-ed published earlier this year, housing experts highlighted the limited choices available to seniors who wish to tap into their home equity while continuing to reside in their homes. The prevailing options identified were Home Equity Lines of Credit (HELOCs) and cash-out refinances, both of which necessitate assets beyond the equity in one’s home.
Nevertheless, the program has encountered recent challenges, including liquidity issues, along with other difficulties faced by reverse mortgage companies. These challenges encompass decreased volume, a significant bankruptcy, and the consolidation of prominent industry participants.
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