The HELOC, or Home Equity Line of Credit, was a very popular loan type during the years of rising home prices. It seemed that equity increases were the rule, and the HELOC was a safe bet for both the homeowner and the lender. Many homeowners took significant amounts of cash out of their equity to finance everything from new cars to vacations and home improvements. Of course, the events since 2006 have put a huge dent in the numbers of HELOC loans. In the past, they accounted for as much as 13%+ of all mortgage loans, but recent numbers are estimated by some sources to be less than 3%.
It's common sense, as so many homes are at their value or under water, worth less than the current first mortgages. But, there are still plenty of homeowners (roughly 1/3 of homeowners in Las Vegas), particularly those who have owned their homes for ten years or longer, who have equity available to tap with a HELOC. But, with lenders very conservative in granting any new credit, the HELOC isn't high on their list of desirable loan products given that 1 in every 119 households are in foreclosure. Many of those foreclosures had 2nd and 3rd liens against the property. Most of which didn't see a penny back of the money they lent out. Lenders fear a further drop in home values, thus a threat to their security for these loans.
The recent trend toward a stabilization of home prices, with the major price indexes seeming to indicate the continuous declines may be at an end, may give the major banks a bit more of a comfort level. Also, the government is exerting a lot of pressure to get lenders to open the tap again on lending, hopefully contributing to economic recovery. Some major lenders have commented that a stabilization in home price declines would encourage them to get back into HELOC lending, something they haven't been engaged in much at all in the last four years.
If you are interested in finding out whether you
Qualify for a HELOC or just want to get an idea on
What your home is worth
Direct: (702) 271-1274