Consumer Home Equity/Home Improvement Lending Survey

Research

AARP Consumer Home Equity/Home

Improvement Lending Survey

Data Collected by International Communications Research (ICR)

Report Prepared by Helen Brown

November 2000

Copyright AARP, 2000

AARP

601 E Street NW

Washington DC



Reprinting with Permission

AARP is the nation¡¯s leading organization for people aged 50 and older. It serves their

needs and interests through information and education, research, advocacy and

community services which are provided by a network of local chapters and experienced

volunteers throughout the country. The organization also offers members a wide range of

special benefits and services, including Modern Maturity magazine and the monthly

Bulletin.

Acknowledgements

This report was prepared in the AARP Membership Cluster for the Consumer Protection

section in Life Resources by Strategic Issue Research in Knowledge Management. For

more information, contact Helen Brown at 202-434-6172.

Table of Contents

FINDINGS.............................................................................................................1

Finances of Home Ownership .........................................................................1

Experience with Home Equity Loans ..............................................................2

Home Improvement Contractors .....................................................................6

CONCLUSIONS....................................................................................................7

List of Figures

Figure 1 Status of Home Ownership.......................................................................1

Figure 2 Percent of Respondents Who Have Seen or Heard Home

Equity Loans Advertisements ..................................................................2

Figure 3 Percent Who Received Home Equity Loan Information............................3

Figure 4 Most Frequent Ways Home Equity Loans Solicitations Received.............3

Figure 5 Percent Who Have Taken Out a Home Equity Loan in the

Last 10 Years..........................................................................................4

Figure 6 Where Respondents Got Their Home Equity Loan ...................................4

Figure 7 How Respondents Selected Their Lender .................................................5

Figure 8 Percent Who Would Turn to Source for Help with A

Home Equity Loan Complaint .................................................................6

Figure 9 Where Respondents Would Go for Help to Resolve a Home

Improvement Contract Complaint ...........................................................7

APPENDIX

AARP Consumer Home Equity/Improvement Lending Survey Annotated Questionnaire

AARP contracted with International Communications Research (ICR) of Media, PA to

include questions on home equity and home improvement loans in their national omnibus

telephone surveys. ICR called 2,114 individuals 50 years old and over between October

23 and 31, 2000. This research reports the findings from interviews with the 1,700

persons (85%) called who said they own their primary place of residence. Persons called

who said they owned a manufactured house or mobile home were not interviewed (10%).

The percentages reported are based on data weighted to represent the U.S. population 50

years of age or older. The margin of error is plus or minus 2.6.

FINDINGS

Finances of Home Ownership

When the respondents were asked, ¡°Do you own your home outright or are you paying

off a mortgage?¡± most said that they owned their home outright (Figure 1).

Figure 1

Status of Home Ownership

Base: Respondents who own their own home

(Unweighted n=1,546)

DK/Ref

2%

Paying off

mortgage

39%

Own home

outright

59%

Source: AARP Consumer Home Equity/Home Improvement Lending Survey, November 2000.

Among U.S. adults age 50 or older the likelihood of owning one¡¯s home outright is

related to three demographic characteristics:

? ages 65 and older (78%) vs. ages 50 to 64 years (43%)

? annual income less than $30,000 (71%) vs. $30,000 or more (50%)

(A large number of older homeowners who own their home outright are retired

and therefore have lower incomes.)

? high school or less education (66%) vs. a college degree (54%) and some college

(52%)

AARP Consumer Home Equity/Home Improvement Lending Survey, November 2000

Page 1

A large majority (95%) of the homeowners have insurance on their home to protect

against loss in case of fire or other disaster. However fewer (75%) think they have

enough money set aside for major home repairs such as replacing a roof. The likelihood

of having enough money for repairs is related to four demographic characteristics:

?

?

?

?

male (82%) vs. female (70%)

annual household income $30,000 or more (83%) vs. less than $30,000 (62%)

college graduates (81%) vs. high school or less (71%)

white (78%) vs. nonwhite (62%)

Experience with Home Equity Loans

In the last year, an overwhelming large majority of the respondents have seen or heard

advertisements for borrowing money against their home (Figure 2).

Figure 2

Percent of Respondents Who Have Seen or Heard

Home Equity Loans Advertisements

Base: Respondents who own their own home

(Unweighted n=1546)

No

13%

DK/Ref

1%

Yes

86%

Source: AARP Consumer Home Equity/Home Improvement Lending Survey, November 2000.

In addition, nearly three quarters (73%) of the respondents say they have received

information offering them the opportunity to borrow money against their homes (Figure

3).

AARP Consumer Home Equity/Home Improvement Lending Survey, November 2000

Page 2

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