Remodeling fuel HELOC borrowing.

Because of their size, shorter term and flexibility, so-called Helocs are increasingly popular for financing home renovations and college tuition.

Wall Street Journal staffer Anya Martin reports on the new, more responsible use of home equity banks are seeing in their loans to homeowners. Martin notes that standards are tougher for borrowers these days, including a standard of 85% of a home’s loan-to-value ratio, meaning the total amount of the equity line plus the outstanding balance of the primary mortgage can’t exceed 85% of the home’s appraised value. She writes:

A positive indicator for home-equity borrowing is a predicted upswing in home-remodeling activity. Annual spending growth for home improvements is expected to increase from 4.3% in the first quarter of 2016 to 7.6% in the third quarter, meaning total annual spending will surpass the previous peak in 2006, according to a Leading Indicator of Remodeling Activity report released Jan. 21 by the Joint Center for Housing Studies of Harvard University.

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