Homeowners cash out equity
Many homeowners have regained equity as home prices increased steadily this year. As these homeowners realize their gains, they may be tempted to cash out some of that equity to remodel their homes, pay for the kids' college or pay off credit cards.
In the second quarter of this year alone, 2.5 million homes with a mortgage returned to positive equity, shows a recent report by CoreLogic.
Those who have enough equity have two common options to extract it: a cash-out refinance or a home equity loan. Since mortgage rates jumped over the summer, home equity loans have started to look more attractive to borrowers who don't want to refinance with today's rates.
Lenders also have been more willing to make home equity loans, now that prices are rising again.
One lender betting on the return of home equity loans is Discover Financial Services. The lender recently started offering home equity loans from $25,000 to $100,000 with rates fixed for up to 15 years.
Could we be heading back to the days when homeowners used their properties as cash machines?
Findlay says it's unlikely, at least for now.
"This generation of consumers has learned that home prices can go up and they can go down," he says.