Are Homes Going To Become ATM’s Again?

During the housing bubble that peaked around 2006 and then burst in 2008 one of the things that got many homeowners in trouble was using their home’s as ATM’s.  They did this by using, in most cases, home-equity loans to take advantage of the equity they had in their homes to give them access to tax-free cash to make improvements on their home, pay for vacations, buy cars, boats, whatever.  This was fine until the value of homes began declining which resulted in many of these homeowners becoming “underwater meaning they owed more on their homes than they were worth.

Yesterday, I wrote an article about the record amount of equity homeowners in the U.S. have in their homes now, even more than in 2006, and today I read a report from TransUnion in which Joe Mellman, their senior vice president, and mortgage business leader, said “There are ample signs that the home equity lending market is poised for growth. Home prices have surpassed 2005 boom levels and household home equity has grown even faster.”  The report goes on to say that HELOC’s (home-equity lines of credit) represented the “greatest number of home equity originations in 2017 at 1.2 million, showing a 2.3% year-over-year growth from 2016”

Hopefully, homeowner’s will remember lessons of the past and be wiser about the use of their equity this time around.  Below is a table from TransUnion showing the top five uses of home equity loans.

Top Five Uses Of Home Equity Loans

Top Five Uses Of Home Equity Loans

Source: TransUnion


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