As Home Values Rise, Spending on Home Improvement Projects Continues to Grow

Use of Home Equity an Increasingly Attractive Option for Consumers

MCLEAN, VA 10/26/2005 12:00 PM GMT (TransWorldNews)

As home prices rise, spending on home improvement projects continues to boom. According to the latest data from Harvard's Joint Center for Housing Studies, American homeowners continued to invest in their homes by spending approximately $262 billion on home improvements and repairs in the first half of 2005. Overall, spending has increased 4.5% since the same period last year and home improvement spending an average of 5% each of the last 10 years.

"As the value of their homes rise, homeowners are also seeing their home equity grow and they are willing and more able to increase their spending on renovation and home improvement projects," said Pam Girardo at Capital One. "The money homeowners spend on remodeling is being reinvested in the house and, with certain types of financing the interest you pay can even be tax deductible. But it's important that homeowners explore their financing options to find the best way to maximize the return on their investment."

"Home equity loans allow you to take advantage of the equity you have in your home without having to sell. Tapping into your home's equity is also an inexpensive credit option that is often very well-suited to home improvement projects," said Girardo.

Which is the best financing option for you?

The two most common home equity products used by homeowners today include Home Equity Lines of Credit (HELOC) and Home Equity Loans. Capital One Home Loans' team of experts - experienced loan consultants who assist customers in choosing the best products to suit their needs - offer a few basic tips for homeowners:

  • Determine how much you would like to borrow. Think through your plans (get estimates from contractors, talk to the experts at your local home improvement store) and determine how much you plan to spend. You might also review your existing debt and consider consolidating other higher-interest debt into a home equity loan.
  • Think about how you'll be using the money. If you are planning a single project with a fixed cost which needs to be paid upon completion of the project (like adding a deck or remodeling a kitchen), a home equity loan might be the best option for you. However, if you are unsure about the final cost, how long the project will take or if you anticipate needing additional funds for another purpose (like tuition or recurring medical expenses), you might be better off opting for a HELOC.
  • Shop around for the best rates. Understand how the interest is calculated on each loan type and find the best rate and the most favorable terms. Interest on a home equity loan is charged as a fixed rate and the principal and interest payment remains the same over the life of the loan. For a HELOC, the interest rate is variable and payments vary monthly with the rate and depend upon how much you've borrowed against your credit line.
  • Plan your budget ahead of time. Make sure that the payments on the loan fit within your budget and that taking out a loan will not overburden you.

For more information on home equity lending options, consumers can visit

About Capital One

Headquartered in McLean, Virginia, Capital One Financial Corporation ( is a bank holding company whose principal subsidiaries, Capital One Bank, Capital One, F.S.B. and Capital One Auto Finance, Inc. offer a variety of consumer lending products. Capital One's subsidiaries collectively had 48.9 million accounts and $83.0 billion in managed loans outstanding as of June 30, 2005. Capital One is a Fortune 500 company and, through its subsidiaries, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.

Capital One Home Loans offers a variety of financing tools, including mortgages for refinancing and new home purchases, home equity lines of credit and home equity loans.

CONTACT: Capital One Financial Corporation
APCO Worldwide
Alison Athay, 206-239-0140

SOURCE: Capital One Financial Corporation


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