FAYETTEVILLE, Ark. – Home values across the U.S. are trending upward1. Across Arvest Bank’s footprint, Zillow.com, an online real estate database, reports increases between 3.2 percent and 6.4 percent in home values. Because of this trend, homeowners are regaining equity in their properties and, in turn, home equity loans to finance home improvements and other major purchases are becoming more available and more attractive.

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Earlier this year, The New York Times2 reported that due to rising home values, improving consumer confidence and a backlog of home improvements that were put off during the recession, home equity-financed consumer loans are expected to grow in 2015. Additionally, consumers will be more inclined to borrow on their equity to improve their existing home rather than sell and move up in price range.

Home equity loans and lines of credit can also be beneficial financing options for other big ticket items like education expenses, appliances, furniture and automobiles, because they are often tax-deductible as mortgage interest.

U.S. News & World Report3 reported that Americans took out $23.4 billion in home-equity lines in the first quarter of 2014, up 15.5 percent from the same time period in the previous year.

Some things to consider before pursuing a home equity loan or line of credit include: Do you have enough equity built up in your home to qualify? What makes the most sense for your situation, a loan with a defined lump sum amount or a line of credit that can be used as needed?

It’s also recommended to limit your overall debt risk and avoid putting your family’s shelter at risk for nonessential purchases. Loan officers at a local bank can help consumers consider all the risks and benefits before applying for a home equity loan or line of credit.

A homeowner can tap up to 85 percent of the home’s value, minus the balance of the mortgage. So, if your home is worth $500,000 and you owe $250,000 on the mortgage, you could take out a $175,000 loan at a reasonably low interest rate.

For consumers, this means there will be more opportunities to make home improvements such as adding a room, building a deck or remodeling a kitchen. For the economy, this could mean an increase in small construction jobs. Data released by the Bureau of Labor Statistics4 supports this and states that nationwide construction employment increased 2.6 percent year-over-year and has been increasing annually since June 2011.

1U.S. News & World Report, “The Best Reasons to Tap Your Home Equity”
2The New York Times, “Home Equity Loans Make a Cautious Return”
3U.S. News & World Report, “The Best Reasons to Tap Your Home Equity”
4Bureau of Labor Statistics