Home-equity lending is making something of a comeback. After being nearly shut down with the collapse of housing prices during the Great Recession, lenders are once again opening up their wallets and allowing people to borrow against the value of their homes.
Newly originated home-equity loans and lines of credit rose by nearly one third during the first nine months of 2013, compared to the same period 12 months earlier, according to industry publication Inside Mortgage Finance.
While still only a fraction of its pre-crash levels — total 2013 home-equity lending is estimated at $60 billion, compared to a peak of $430 billion in 2006 — rising home values in recent years are putting more equity in borrowers’ hands, while a gradually stabilizing economy is giving lenders more confidence to lend.
So the fact that they’re making a comeback is one thing to know about home-equity loans. If you’re thinking about pursuing one, here are four other things you’ll need to know.