Americans Are Tapping Their Home's Equity Again

[bjl584]

Americans Are Tapping Into Home Equity Again

[MonkeyMama]

""We are seeing more responsible uses today, like home improvements, education expenses or other major expenses that would be a more responsible use of a customer's home equity," Blackwell said."



This is exactly what got people into all this mess in the first place.

I mean seriously? Do people expect this home equity to actually hold? Interest rates have nowhere to go but UP. Bad news for home prices. Home prices have been rising for about 5 minutes, and the stampede has already begun.

Sorry - this quote struck me as beyond ANNOYING!

[disneysteve]

Of course, the fact that this is happening means that more people actually have equity to tap. That's a good sign considering the flood of underwater homes in recent years. Personally, we've never been underwater and have over 100K in equity. If I felt there was a good reason to draw on that, I would, not that I have any intention of doing so but I wouldn't rule it out.

[kork13]

Of course, the fact that this is happening means that more people actually have equity to tap. That's a good sign considering the flood of underwater homes in recent years. Personally, we've never been underwater and have over 100K in equity. If I felt there was a good reason to draw on that, I would, not that I have any intention of doing so but I wouldn't rule it out.

Agreed.... Depending on the circumstances, if you have sufficient equity, approach the home equity loan responsibly, and intend it for a valid purpose (paying for something of long-term value...not consumerism), I would potentially consider it as an option, particularly if the terms were good. Bottom line, this is a situation where "it depends" is very appropriate.

[disneysteve]

Agreed.... Depending on the circumstances, if you have sufficient equity, approach the home equity loan responsibly, and intend it for a valid purpose (paying for something of long-term value...not consumerism), I would potentially consider it as an option, particularly if the terms were good. Bottom line, this is a situation where "it depends" is very appropriate.

I took out a HEL years ago which I used to repay some student loans and a car loan, both of which had considerably higher interest rates. Given the same circumstances, I would definitely do it again.

[MonkeyMama]

To kork and Disney - you are not by any means "most people."

I live on a street where over 50% of the homes have been lost to foreclosure. People here went CRAZY with equity. If you asked them they all had very good reasons to tap the equity. They would tell you medical bills, unemployment, college, home improvements, to finance cars, etc. The reality is they were all financing lifestyle FAR beyond their means. Plain and simple.

I think it's less *what* the money is used for and more how responsible the home owner is. You should see the money spent on home improvements, in particular. Total insanity. College is another one where insanity prevailed. I don't think most home equity loans are being handled responsibly. Certainly not where I live.

[wendykw]

We refinanced

Our heat went out last February, and we had to replace the furnace. That added a payment that strained our budget. We had already been hit with a $200 per month increase to our Escrow account due to property revaluation and the subsequent increase in taxes. Our property's value increased by over 40% according to the county. With mortgage rates so low and these new bills, we decided to see if the county was right about our property value and refinance. The house appraised at only a few thousand less than the county's revaluation number. We refinanced about 60% of the appraised value. We were able to pay off the furnace, get needed home repairs and upgrades done, pay off a couple of bills and drop our mortgage payment by almost $100. It saved us a total of over $400 per month in our budget. We also were able to get tax breaks and utility rebates for the energy savings improvements we did (96% efficiency furnace and new windows). With a house that is over 50 years old, the windows are both esthetically pleasing and energy saving. It will be interesting to see what our utility savings will work out to be. We do equal pay plan for our utilities, so we'll get a better idea in June when the yearly report comes out. Yes, I realize we moved debt from one place to another and added debt with the home improvement part of the refi..On the other hand, we lowered the interest that we pay and got the house in the best shape it has ever been during our ownership. You do what is best for your family.

[pennywise28]

I think anyone who still is in their homes after the real estate bubble popped is in good shape. I know too many people that were put out in the street after their arm on their mortgage was introduced. Rates changed from a manageable 8 percent to a whopping 18 in some cases.

[disneysteve]

Another thing to keep in mind is that many areas of the country really weren't greatly affected by the whole real estate mess. My area (southern NJ) fared pretty well. Our house stagnated in price appreciation but didn't really lose any appreciable value. All of the stats that we kept hearing, like 1 in 5 homes being underwater, mainly involved 4 or 5 states (Nevada, Arizona, Florida, California). If you removed those states from the average, the rest of the country wasn't in nearly that bad shape. So a lot of it came down more to consumer confidence and banks tightening up their lending.

[Blessed]

double post

[Blessed]

Not tapping home equity is the reason we are sitting in our second paid for home with zero debt.