Posted on 03/28/2016 6:36:42 AM PDT by Lorianne
At hardware stores along the U.S. East Coast in recent weeks, TD Bank has been trying to persuade shoppers to think bigger than paint and plumbing supplies: The bank wants them to start taking cash out of their homes again. The TD Bank tour bus, equipped with a galley kitchen and iPads where homeowners can start the application process, is part of a marketing push unusual for the mortgage industry since the housing bust. As the broader mortgage market remains in the doldrums, banks are again touting home-equity lines of credit, which allow homeowners to draw down the equity in their home as they need the cash, as well as cash-out refinances, which involve taking cash out of a home while refinancing and ending up with a larger mortgage balance.
The effort is gaining steam as banks try to offset faltering mortgage originations and a refinancing wave that is fizzling out. Lenders are betting that offers for home-equity lines of credit, or helocs, will resonate with many borrowers whose home values are higher than they were just a couple of years ago and who need cash for renovations or other expenses after holding on to their homes for longer than expected. Lenders extended just over $156 billion in home-equity lines of credit last year, the largest dollar amount since 2007, the beginning of the housing bust, according to new figures from mortgage-data firm CoreLogic. That marks a 24% increase from 2014 and a 138% spike from 2010 when new approvals hit a low point. The average line amount extended to homeowners last year reached a record $119,790, according to the firm, which tracks the data back to 2002.
(Excerpt) Read more at wsj.com ...
This time it will work.
Obama/Yellen must be getting anxious to avoid the R-word. Can’t compel the sector to fake numbers, print money, and buy your own stocks forever.
A friend of mine that lives down the street bought a home for $180k and put $40k down. After a few years of HELOCs while the market was rising she lost her job. She decided to sell the house and she and the real estate agent decided the price needed to be $349k for her to break even on it. n She has now been almost foreclosed on twice. Once she was bailed out by her bank, they lowered the payments to an interest only loan, and then by Keep Your Home California.
She redid her kitchen, her pool and bought 2 cars with the HELOCs.
I was trying to talk her out of all of it while she was doing it. She wouldn’t listen.
Can’t cash out in Texas. That’s the fail safe.
However, let’s say you have a 30 year fixed loan at 6%. You can refinance for 3.25% take 40k to do upgrades or whatever and have the same monthly payment. If you are not worried about when your loan will be paid off or your new monthly payment why wouldn’t you do it?
Depends on where you are at in the loan. We refinanced once 15 years ago to a 15 yr loan. Didn’t take out any money, just refinanced the loan. Wasn’t long until we were at a place where any refinance or loan didn’t make any sense. Our house is paid for now and we have no payment except property taxes. This was during the same time period she was doing her thing. Her house will never be paid for now and she acknowledges that if a financial catastrophe comes she can do nothing but walk away and rent.
This s good news right? I mean, what could possibly go wrong?
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