Home Equity Lenders Extending More Credit and Subordinate LoansBy
Finally homeowners are seeing a bump in property values in California. This is enabling some borrowers in San Diego and Orange County to leverage their equity with a second mortgage. Over the last few years, very few brokers or lenders have offered home equity lines of credit.
Are Home Equity Mortgages Coming Back?
If you have a pressing need to raise some cash, here’s some good news: Rising home values are encouraging lenders to revive a product that imploded during the housing bust years home equity mortgages. Researchers at Equifax, one of the three national credit bureaus, say total outstanding balances of second home mortgages at banks rose in the latest month for the first time in nearly five years.
The Federal Reserve recently reported that American homeowners’ equity stakes rose $406 billion in the second quarter, a 5.9% increase over the previous quarter and the highest it has been since 2008. Home equity mortgages, which include fixed-payment loans as well as floating-rate equity lines of credit, put the bank in second position in the event of a foreclosure. Say you have a house worth $250,000 with a $200,000 first mortgage and a $20,000 second mortgage. The proceeds of any foreclosure would initially be used to pay off the lender in the first position. Any remainder would pay off the holder of the second lien.
Equifax, which receives information from virtually every major bank and mortgage lender, compiles data on a variety of loan products. In its latest National Consumer Credit Trends study, it found that home equity lending appears to be rebounding fastest in New Mexico and California, where outstanding balances jumped 2.3%, along with Nevada (2.1%), Colorado (2%) and Florida (1.6%).
Rate quotes and terms on home equity loans appear to reflect some of that uncertainty.
Visit a directory like BankRate.com or HomeLoanWholesale.com for a list of lenders for home equity loans online. showed that depending on how banks perceive local markets, rates can vary significantly.We suggest comparing mortgage quotes from several lenders to help uncover the best home loan or 2nd mortgage for your needs. Read the original 2nd loan article from the LA Times.