Home Improvements Expected to Top the List of Reasons to Tap Home Equity in 2019 — and Green Incentives Sweeten the Deal
By Gary Kasper, President at New Vista Solutions
Despite recent fluctuations in mortgage interest rates, most economists agree that homeowners will continue to use their home equity as the go-to resource for cash rather than refinance their current mortgage in 2019. Data from Black Knight reports tappable home equity remains strong at $5.9 trillion.
Many predicted the Tax Cuts and Jobs Act of 2017 would be the death knell for home equity loans with the suspension of the tax deduction on home equity interest from 2018 to 2026. But let’s not forget the caveat that allows the deduction on equity loans used to ‘buy, build or substantially improve’ the home securing the loan — leaving home improvements as a popular use of funds from a home equity loan.
Rising home prices are causing many homeowners to stay in their homes longer, which can lead to add-ons and renovations. Frank Nothaft, chief economist at CoreLogic, stated, “Compared to 10 years ago, the typical homeowner has owned their home for four years longer.”
Nothaft also pointed out that the decision to stay in their homes has given homeowners added incentive to renovate. “To finance these alterations, they often choose a cash-out refinance of their first lien or opt to take out a second-lien home equity loan. Thus, we expect an increase in home improvement home equity lending in 2019,” he said.
As more homeowners jump on the home-improvement bandwagon, they’ll be pleased to learn that low interest rates and tax deductions aren’t the only perks available to them. Government-sponsored financial incentives are available to those who include sustainable and energy-efficient upgrades in their renovation projects.
Typical home improvement projects include heating and cooling system replacements, hot water heater upgrades, insulation improvements, energy-efficient doors and windows, roofing, ENERGY STAR® appliances, solar systems and water conservation and resiliency measures (e.g., seismic retrofits and wind hazard protection) — all of which have financial incentives available.
Most of the incentives are in the form of personal and corporate tax credits or rebates. Corporations can also receive tax exemptions or deductions, as well as available grants and subsidy programs.
Finding these incentives was once a time-consuming task, but IncentiFind has solved that problem. This new company has developed a database that currently houses more than 8,000 green incentives available to property owners, and that number is expected to increase to 12,000 in 2019.
New Vista Solutions has partnered with IncentiFind and will soon bring to market a new product called The Green Report, which is derived from information found on the IncentiFind website.
The website offers a free search feature that quickly identifies potential incentives based on the website visitor’s answers to project-specific questions presented in a short questionnaire. If the website visitor wants to go a step further, they can order The Green Report on the website for a fee.
In addition to The Green Report, IncentiFind offers a turnkey, paid service that will help determine a project’s eligibility and will assist with applying for the incentives through an application portal.
Although The Green Report is available to anyone seeking information about green energy incentives, New Vista Solutions designed The Green Report to give lenders access to green incentive information that can be re-marketed to borrowers and, at the same time, be used to promote any loan product that provides financing for construction and renovation projects involving green energy upgrades.
So, homeowners and home equity lenders have an opportunity to work together in the green energy space. Home equity lenders have a new marketing tool, and property owners can save money on their energy-efficient home improvement projects. Everybody wins.
New Vista Solutions is a full service vendor management company for residential and commercial mortgage lenders, offering a suite of compliant, technology-driven settlement services products through a national network of best-in-class service providers. Specializing in the home equity market, New Vista Solutions is helping Community Banks and Credit Unions streamline the approval process for home equity loans by integrating the NVS ordering platform with MeridianLink, a loan origination system for consumer lenders.
For more information, visit NewVistaSolutions.com, or call 866-721-9295.