By Vanessa Toledo-Vickers

Home ownership is a goal for many individuals and families, and we must do all we can to increase lending in underserved communities. As we move out of the pandemic into the recovery stage, financial institutions and not-for-profit organizations have many resources to help people determine if home ownership is right for them, obtain a loan to fit their budget, and make an informed decision.

Citizens and NeighborWorks Blackstone River Valley work to provide safe, affordable and equitable housing to community members. Working collaboratively, this financial institution and not-for-profit organizations who are HUD Certified Counseling Agencies have provided hundreds of potential homebuyers with sound financial and objective advice and have helped them realize their dream of homeownership.

A recent report from the National Association of Realtors showed that mortgaged homeowners amassed over $2.95 trillion in equity — putting an average of $51,470 in borrowers’ pockets — on an annual basis in 2021’s second quarter, according to CoreLogic.

Median home prices are at a record high in Rhode Island – pushed by high demand, scarce inventory and low interest rates. The median sales price reached a new peak in August 2020 of $335,000, a 14 percent increase from August of last year.

With gains in home equity reaching historic levels, homeowners are in a position to leverage their equity to fund important life goals efficiently and confidently as needed but should do so in a way that is financially responsible. One option is to leverage a Home Equity Line of Credit (HELOC) which is a line of credit that uses your home as collateral. The amount you can borrow is based on the value of your home minus any mortgage(s) you may have. As you pay off your mortgage and the value of your home goes up — your home gains equity which you can then leverage via a HELOC to renovate your home, consolidate debt, support family, fund education, or purchase a vehicle. A HELOC often has a lower interest rate than other financing options, so it can be a big advantage for homeowners. A HELOC interest rate is variable and adjusts with the Prime Rate. Potential borrowers should take advantage of low fixed interest rates, and shop around for lenders that provide an easy digital experience, fast access to funds and personalized expert advice.

Citizens prides itself in providing not only sound financial products and services but the financial education to make those sound financial decisions.

Customers who are interested in any financial product should be looking to partner with their bank on smart financing options to tackle short — or long-term — expenses. They should also find a lender, and nonprofit HUD Certified Counseling Agency who will help them determine the best financial path forward to pay down their HELOC and minimize risk, in a manageable and cost-effective way that’s personally tailored to improve their credit score and open up future financing opportunities.

Citizens recently rolled out the GoalBuilder Home Equity Line of Credit. This product gives customers financial flexibility to maintain savings, while paying for what’s important today.

Unfortunately, we can’t predict the future. But, we can plan for it. A HELOC can provide you the financial flexibility for whatever comes at you, good or bad. No matter the situation, you’ll be prepared to take advantage of amazing opportunities or protect yourself from the stress that life often throws at us.

Vanessa Toledo-Vickers, vice president and Rhode Island community development market manager, Citizens