When it comes to using their home equity, Millennials and Gen X homeowners are doing things a little differently. With the Great Recession of 2007-2009 still fresh in their memories, these 30- and 40-something homeowners have a healthy caution towards home equity. They’re also adapting to the changing dynamics in education, family life, and the housing market. All this has led these generations to put their home equity to work in some new ways.
Like their older neighbors, Millennials and Gen X-er homeowners are using home equity to fund home improvements—they’re just doing it in different ways than the older Boomer Generation. For one thing, younger homeowners are doing smaller projects and are more likely to be willing to take on repairs and upgrades themselves. And since many of the homes in the Gen X and Millennial price range are “fixer-uppers,” there are no shortage of opportunities for these homeowners to put in some sweat equity. Socially aware and cost-conscious Gen X-ers and Millennials are also investing in green upgrades like energy-efficient windows and solar panels.
Better Rates on Credit Card & College Debt
Many are opting to tap into their home equity for debt consolidation. With credit card interest rates hitting all-time highs, rolling that debt into a home equity loan or home equity line of credit can be a real money-saver. Younger homeowners are also consolidating their student loans—especially higher interest school loans from private lenders. They’re using home equity to get a better rate and simplify their monthly bills.
Younger homeowners are also more likely to use home equity to start a new business. (HELOCs and home equity loans often have lower rates and less paperwork than traditional small business loans.) 44% of Millennial homeowners report using their home equity to support or care for family members. And compared to Baby Boomer homeowners, people in their 30s and 40s are more likely to use home equity for experiences, such as travel.
Custom Fit Home Equity
For Salal members, we’ve developed Custom Fit Home Equity. It’s a uniquely flexible home equity tool that combines the best parts of two traditional home equity products. Custom Fit gives you one variable-rate line of credit for quick access to cash when you need it. You also get up to five fixed-rate loan segments that let you lock in a low rate whenever you want. And you always have just one simple monthly payment.
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Custom Fit Home Equity
|LINE OF CREDIT - VARIABLE RATE||6.99%-9.24%**||No minimum draw amount. Revolving line of credit with 10-year draw period |
15-year amortization after end of draw period.
|FIXED-RATE LOAN SEGMENTS||6.50%-10.50%***||$5,000 minimum draw amount. 5, 10, and 15-yr terms available. Fully amortized principal and interest payments.|
*APR=Annual Percentage Rate. Actual APR will be based on creditworthiness.
**Index=Wall Street Journal Prime Rate. The APR is variable and may change during the term of the loan. The minimum APR is 3.24% and the maximum APR is 18.00%.
***10-Yr Nominal Constant Maturity Treasury. EXAMPLE PAYMENT—Fixed-Rate Segment: $393.71 a month based on a 60-month term, $20,000 loan at 6.75% APR.
All loans subject to approval. Loan amount and HELOC combined loan-to-value (HCLTV) subject to occupancy status; Max. loan amount from $150,000 to $250,000 and HCLTV can range from 65%–70%. Max. LTV based on approved credit and property valuation. Homeowner’s insurance required. Residential real estate only. Subject property must be in CA, OR, or WA state and vested in borrower’s name. Should an appraisal be a loan requirement, applicants pay half of the fee (approx. $350–$450); all other application fees are covered by Salal. Credit Union membership is required. Consult a tax advisor regarding the deductibility of interest. Salal Credit Union NMLS #416045.
Rates are current as of December 6th, 2022.