Home Equity Offers Make a Comeback, but Be Careful
by. Susan Tompor
The comeback in home values means more people can tap into quick cash through home equity loans to pay for college, credit card debt, and yes, even to redo the driveway.
Jo and Bronce Click of Dearborn Heights took out a $12,000 home equity line of credit about two weeks ago specifically to pay for a driveway that’s estimated to cost about $7,000. She obtained the loan through her credit union at a rate of 5.25% — or 200 basis points plus the prime rate, now at 3.25%.
“It seemed like the logical option versus using a credit card. The interest rate on a credit card is ridiculous,” said Jo Click, a graphic designer in the marketing department at Wayne State University.
The Clicks are on the front end of a rising trend in home equity lending.
Community banks, credit unions and major banks have shown renewed interest in making the loans and offering lines of credit, as home values climb in many markets and homeowners add to their equity or peek their heads above water for the first time in several years.continue reading »