“Families have a whole lot more home equity wealth than they previously had,” says Frank Nothaft, Freddie Mac’s chief economist. And many homeowners are tapping into it for remodeling projects.
Arizonians are among the millions of homeowners who have taken out almost $2.8 trillion in home equity loans in the last five years. Freddie Mac estimated that borrowers cashed out $170 billion of their home equity in 2006 alone. In 2005, the figure was a record $244 billion.
If you want to cash out some of your home equity, you have two options:
Home Equity Loan Or Line Of Credit?
An Arizona home equity loan will give you a set amount of money all at once. It can either be a fixed-rate loan or an adjustable-rate loan. Home equity loans makes sense when you need to pay for big-ticket items like major remodeling projects, or if you want to pay off high-interest credit cards or other debts.
A home equity line of credit (HELOC) is more like a credit card. You can draw on the line any time, up to the credit limit. HELOCs usually start with lower interest than fixed rate loans—usually one percent over prime—but the rate can climb quickly after the initial period. Once you draw on a HELOC, you will owe a monthly minimum payment on the outstanding balance.
Remodeling Projects
The Harvard University Joint Center for Housing Studies estimates that Americans will spend nearly $160 billion on home remodeling through the first half of 2007. And according to a report by the National Association of Realtors (NAR), “A year ago, many remodeling jobs returned 80 percent of their cost or more when the owner sold the house. Some of the most profitable renovations, such as an upscale residing, actually paid off more - 103.6 percent - than they cost. Other profitable renovations included midrange kitchen remodelings, which paid off 91.7 percent, and window replacement, which paid off 89.6 percent.”
You can receive a free quote on an Arizona Home Equity Loan at Arizona Refinance Center. It is a no-obligation way to see how much you can borrow toward your next remodeling project.
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