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What Rising Demand for HELOCs Mean for Lenders


What Rising Demand for HELOCs Mean for Lenders


One would think the demand for home equity loans and HELOCs would diminish with the new tax laws, which prohibits deducting interest if the loan is used to pay off personal living expenses. But that’s not likely to happen.


According to the Joint Center for Housing Studies of Harvard University, a surging economy is expected to fuel a rise in home improvement spending all the way through the year 2025. And the interest on home equity loans is still deductible if the loan is used for home improvement projects.


In other words, lenders need to be ready for home equity loan demand to grow—and they need partners that can help. When it comes to evaluating properties for home equity loans, here are three things to look for in a valuation provider:


1. Data and Oversight


To stay on top of the demand of home equity products, you’ll need high quality data and the expertise of a qualified appraisal professional.


A property inspection can be achieved by trained experts who are not necessarily appraisers. But the information captured during a boots-on-the-ground review should be coupled with robust data as well as strong analytical models that are fully managed and evaluated by a competent credentialed appraiser. This will ensure outcomes that are not only fast and affordable, but reliable and thorough.   


2.  Speed


Turn times for traditional purchase appraisals have grown longer for a variety of reasons. But that shouldn’t be the case for HELOCs. Borrowers expect home equity loans to close much faster than a traditional mortgage.


Most home equity valuations need only an exterior-only evaluation, so the results should arrive in half the time of a traditional appraisal. Your valuation provider should have home equity valuations that save multiple days in the loan approval process, so borrowers can get their home improvement project going quickly.


3.  Specific Expertise


A lot of appraisers and valuation providers will say they can do HELOC valuations. But in some markets, there is resistance among appraisers to adopting the type of new methodologies that are best suited for home equity valuations.


Likewise, a valuation provider without an established network will have trouble fulfilling orders. Your provider should have qualified appraisers who are available and who leverage technology for speed and human touch for accuracy, so they can really deliver the goods.


Ultimately, we expect more people will take advantage of home equity products for home improvements before rates go higher. If that happens, you don’t want to be caught off guard by having the wrong valuation provider.  Ask your providers about the solutions they offer and decide if they have the technology and skilled staff to turn orders around quickly. \


If you’d like to learn more about how we can help you, drop us a note at We’d love to hear from you.