The Wall Street Journal (reprinted on Realtor.com) says that “rising home prices are getting borrowers comfortable again with the idea of tapping their homes for cash” and that HELOC’s (home-equity lines of credit) are back! They say this reflects growing consumer confidence and that it could benefit the economy as homeowners get extra money to spend. Home-equity lines of credit are similar to credit cards (the line of credit is based on the amount of equity) except that the house is being used as collateral. Or in the case of a “cash-out refi,” borrowers can refinance their existing mortgage into a new one with a higher principal balance, thereby putting cash in their pockets. The WSJ reports that HELOC loan originations rose 8% to nearly $46 billion in Q2 2017, which was their highest level since 2008 and mortgage refinances were up 6% from a year ago. Indeed…
“If customers feel like their home values are stable or increasing, and if they feel like their job prospects are good—that they will have the ability to pay back a loan they take—then they will start to take out more home-equity lines,” said Mike Kinane, head of U.S. consumer-lending products at TD Bank. “That is what we are starting to see.”
Click here to read the full story on Realtor.com.
