HOCs now require $120K upfront and most borrowers are unaware they are required to withdraw 80% or more of their credit line immediately at closing. This means they could be forced to withdraw $120,000 of their approved amount, whether they need it right now or not. Nonbank lenders operate differently in the home equity market, operating under a different business model where they fund loans through institutional investors seeking fast returns. The Federal Reserve estimates that American homeowners hold over $34 trillion in home equity as of late 2025, representing a record level of household real estate wealth across the country. The average homeowner with a mortgage now sits on roughly $295,000 in equity. The Mortgage Bankers Association reported that total HELOC and home equity loan originations rose 7.2% in 2024 year over year, and the MBA’s 2025 Home Equity Lending Study found that total debt growth grew 10.3% compared to the previous year. The financial consequences of borrowing more than you actually need can be dire, with high draws for those who borrow more than budgeted, increasing risk of falling behind budgeted back on payments.