The Importance of Tax Credits and Home Equity Loan Spending

Our friends at the NAHB just posted this interesting article about the correlation between tax credits, home equity lending, and remodeling activity in this current economy.

Historically, home equity loans have been an important source of funding for home improvement spending. The following analysis demonstrates this relationship and examines what impact recent declines in home equity loan use have had on the remodeling sector, as well as the positive effects of the residential energy-efficient tax credits. In particular, as home equity withdrawal declined during the Great Recession, remodeling spending fell. But the decline in remodeling activity was tempered by the existence of the tax credit programs.

According to the Census Bureau’s American Housing Survey (AHS), in 2005, 48% of home equity loan dollars were used for home improvement. That percentage has grown in recent years, increasing to 49% in 2007 and 51% in 2009 (the most recent edition of the AHS).

Read the full article on the NAHB blog here.

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One response to “The Importance of Tax Credits and Home Equity Loan Spending

  1. Buying a home is a real experience, be careful. Make sure you choose a home you like, and a home with some things in it that you have always wanted.Tax breaks, ( ? ) Read them good. Read the fine print on any loan offer and ARM loans, Theses days getting a mortgage loan is not like it was just a few years ago. Sub prime loans are mostly out. I would stay away from variable interest rate mortgage loans because they may go up on you. I Worked for a well known 8 th largest lender in the U.S. during part of the mortgage refinance boom around 2002 and 2003 and they started to focused on selling variable interest rate mortgage loans around 2003 or 2004 which seemed more affordable at first with some cash out, it looked good to the customer in the short term. Our company did alot of business and I saw a few years later how the interest rates went up and some people just could not pay their increased house payments. This is a big part of what happend back around 2003′ 04 and 05 which I believe led partly to the way things are now and how things went in 2007 and 2008. The company I worked for processed about 500 to 900 loans per day. Stay away from variable interest rate mortgage loans.
    Learn more. and good luck. ; )

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