FirstClose Survey: Many Consumers Don’t Understand Advantages of Home Equity

(Image courtesy of Tom Fisk/

FirstClose, Austin, Texas, released a recent survey of homeowners, finding many lack awareness of the advantages of leveraging home equity and other related topics.

The survey incorporated 1,000 homeowners who have lived in their homes for at least two years and have at least two credit cards with outstanding balances. Of those, 30% had between $2,500-$10,000 of credit card debt.

In general, many respondents did not know some key facts about interest rates, including 44% who didn’t know what the interest rate was on their credit cards. Moreover, 77% of respondents didn’t know what the average interest rate was on a HELOC–significantly lower than the average credit card interest rate.

Regarding the question of whether they’d be willing to tap into their home equity to pay off debt, 49% said yes and 51% said no. However, 56% said they would access the equity in their homes to fund a renovation project.

In terms of awareness about home equity products, 40% didn’t know the difference between a closed-end home equity loan and a HELOC.

Thirty-seven percent of respondents thought if they took out a HELOC, they would be giving up their low first mortgage interest rate. FirstClose noted about a third of the respondents have a rate under 3.5%.

“The findings of this survey underscore the critical gap in consumers’ understanding of the financial benefits of leveraging their equity,” said Tedd Smith, CEO of FirstClose. “U.S. homeowners currently have more than $28 trillion in tappable home equity that could be used to pay down credit card debt, which now has topped $1.14 trillion.”