Article by
Home values have recovered enough for banks to begin offering home-equity loans again. It pays to be informed before you sign up for one.
Those offers from lenders are starting to arrive in the mail to metro Phoenix homeowners again. The area's home values have recovered enough for banks to begin offering home-equity loans.The number of home-equity loans climbed 20 percent last year compared with 2012, the biggest increase since the housing crash, according to financial research firms Equifax and Moodys. U.S. homeowners signed up to tap more than $92 billion in equity during 2014. Lenders say the upward trend continues this year.
Metro Phoenix's home values are up more than 65 percent from the crash, and only 20.6 percent, or about 186,500 Valley homeowners, now are underwater, according to real-estate research firm CoreLogic.
During the crash's low point for home prices in 2011, nearly 50 percent of Phoenix-area homeowners owed more on their mortgage then their home was worth.
Banks trying to drum up more revenue are offering more home-equity loans or credit lines but so far are being much more cautious about the terms. A decade ago, borrowers could take out home-equity loans, also known as second mortgages, for as much as 125 percent of their house's value. A lot of homeowners defaulted on those loans during the crash.
When home prices started falling in the Valley during 2009, many homeowners had their home-equity lines yanked or reduced by lenders and were left without funds they had counted on to pay for college, trips, cars and investment houses.
Now most banks are offering deals to allow consumers with good credit to borrow as much as 85 percent of their house's value.
Most borrowers now are using home-equity financing to fix up their houses, which likely will improve their value.
If a home-equity offer tempts you, here are some tips and facts:
• Most home-equity loans have fixed rates and terms that usually span 10 to 15 years.
• Home-equity lines of credit, called HELOCs in the financial industry, can have variable rates, and that means required payments can go up and down.
• Watch out for balloon payments.
• Typically, home-equity loans are approved more quickly than regular mortgages.
• Check out rates at credit unions as you shop for the best deal.
• And, of course, monthly payments are required.
Reach the reporter at catherine.reagor@arizonarepublic.com.
No comments:
Post a Comment