Home Equity Loans Used Cautiously, Survey Shows

WASHINGTON —  A national survey on home equity loans found that Americans use them with caution and limit the amounts they borrow because “they’re well aware that they’re betting their home,” private researchers said today.

Fifty-eight percent of homeowners had a first mortgage and 11% had other loans secured by home equity, according to a July-November survey of 2,510 households by the Survey Research Center at the University of Michigan.

Traditional second mortgages--loans for a fixed amount to be repaid on a fixed schedule--were held by 5% of the homeowners. The newer home equity lines of credit, which allow people to borrow money at their discretion up to an approved credit limit, were held by 6%.

The lines of credit are revolving loans that make money available to the homeowner as needed. Monthly payments vary, based on the amount of credit used, and the loans usually carry an adjustable interest rate tied to a standard index.

Among families with approved lines of credit, 31% had not borrowed any money, either because the planned need for the money had not arisen or because the credit line was meant to be used as an emergency reserve, according to the survey.