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Home values are up: the benefits of taking out a HELOC now


Jan 19, 2023



In the United States, the real estate market has pushed home equity up to record highs. However, there’s no guarantee that the housing market will maintain its current strong stride. 

If you’re a qualifying homeowner, you should lock in the recent gains in equity for future use. If the real estate market cools down in the near future, we will see more people looking for less expensive financing options. 

By taking out a home equity line of credit (HELOC) now when equity is up, you could get ahead of the curve and also benefit from the recent growth in home prices. 

Let’s look at the benefits of taking out a HELOC now while the market is hot so you can leverage your booming equity. 

The Link Between Home Values and Equity 

Your home prices have probably increased in value recently, meaning that your equity is likely higher than ever — and you may not even realize it. According to Black Knight data, the average U.S. homeowner has $153,000 in “tappable” equity. 

This is because when home values increase, equity does, too. 

According to the National Association of REALTORS® data, home prices hit an all-time high of $413,800 in June 2022. 

Just one month later in July 2022, prices dropped to $403,800. In August 2022, prices dropped again to $389,500. While prices have already begun to dwindle, they are still significantly higher than in previous years. 

If the housing market continues to cool off, the increases in equity that homeowners are currently seeing may not last. As a result, there may be immense value in acting now to take advantage of the strong equity. 

How Can Homeowners Tap Their Equity? 

Homeowners can convert their equity into accessible cash by leveraging a home equity line of credit (HELOC). 

A HELOC is a loan that uses your home equity as collateral. To qualify for a HELOC, homeowners generally need to have met a minimum equity threshold and maintain good credit.

HELOCs are known to offer competitively low interest. Since the home equity is backing the loan, lenders can offer borrowing homeowners preferential terms and conditions. 

Since a HELOC’s maximum loan amount is the amount of equity built up in the home, you may be able to access higher credit lines by getting a HELOC while the market is still thriving. 

If you wait, even if your borrowing qualifications do not change, you could be subject to a reduced loan amount due to real estate value and equity market trends. 

What Can You Do with a HELOC? 

Since a HELOC can give you the power to turn your equity into tappable cash, there are many things you can do with your newly-accessed equity. 

Just like any source of funds, how you use them is up to you. Generally speaking, homeowners use their HELOCs to cover high-ticket expenses for a variety of reasons. 

So what can you really do with a HELOC? Here are a few of the common reasons why homeowners take out HELOCs. 

  • Did you want to remodel, renovate, or redecorate your home? 
  • Did you have to cover unexpected expenses, such as medical expenses? 
  • Are you saving up to cover the costs of tuition? 
  • Are you finally ready to go on a dream vacation with your family?
  • Do you need to pay down your debts? 
  • Are you looking for a cash source to cover the down payment on a car? 
  • Are you interested in building an emergency savings fund? 

If you’re faced with any of these financial needs, a HELOC can provide you with the money you need by converting your home equity into financial power. 

Discover a Frictionless HELOC with Hitch

If you act now while the markets are performing positively, you may be able to set yourself up for a better long-term outlook with your HELOC. 

Like all loans, a HELOC is technically a debt. The money you pull out and convert into cash is your principal balance. If you are able to secure a higher loan amount, you can help boost your credit with a favorable debt-to-credit ratio. 

A higher loan amount will give you greater bandwidth, reducing the debt-to-credit ratio set by your HELOC’s principal balance. 

This is one of the ways that you can take advantage of the current real estate market conditions to lock in a great situation that can benefit your financial future for years to come. 

Interested in making the most of the current market conditions? Take the first steps with Hitch. When you source your HELOC through Hitch, you can access the following benefits: 

  • 10-year interest-only payments
  • Quick application process
  • Borrow up to 90% of your home’s value
  • Ability to redraw
  • Quick access to funds
  • More flexible underwriting
  • Keep your low interest rate on your first mortgage
  • Flexible pre-payment options 

Ready to see your rate with Hitch? Click here

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Equal Housing Lender

Hitch, Inc. NMLS #2383367 #2383367

2158 NW Toussaint Drive. Bend, Oregon 97703

1. Qualified applicants may borrow up to 95% of their home’s value. This does not apply to investment properties.

2. HELOCs have a 10-year draw period. During the draw period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) the total of all accrued finance charges and other charges for the monthly billing cycle. During the draw period, the monthly minimum payments may not reduce the outstanding principal balance. During the repayment period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) 1/240th of the outstanding balance at the end of the draw period, plus all accrued finance charges and other fees, charges, and costs.The lender will calculate this amount by taking the outstanding Account Balance on the last day of the draw period and dividing it by 240 months and then adding any finance charge that accrues but remains unpaid during the monthly billing cycle plus any other fees, charges and costs to the fixed principal payment that is due. During the repayment period, the monthly minimum payments may not, to the extent permitted by law, fully repay the principal balance outstanding on the HELOC. At the end of the repayment period, the borrower must pay any remaining outstanding balance in one full payment.

3. The time it takes to get cash is measured from the time the Lending Partner receives all documents requested from the applicant and assumes the applicant’s stated income, property and title information provided in the loan application matches the requested documents and any supporting information. Most borrowers get their cash on average in 21 days. The time period calculation to get cash is based on the first 4 months of 2024 loan funding's, assumes the funds are wired, excludes weekends, and excludes the government-mandated disclosure waiting period. The amount of time it takes to get cash will vary depending on the applicant’s respective financial circumstances and the Lending Partner’s current volume of applications. Closing costs can vary from 3.0 - 5.0%. An appraisal may be required to be completed on the property in some instances.

4. Not all borrowers will meet the requirements necessary to qualify. Rates and terms are subject to change based on market conditions and borrower eligibility. This offer is subject to verification of borrower qualifications, property evaluations, income verification and credit approval. This is not a commitment to lend.

5. The content provided is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply.