With many Americans house-rich, here are the best ways to tap your home for cash.
Last year, originations of home equity loans and HELOCs increased 50% compared to two years earlier, according to the Mortgage Bankers Association.
Still, at less than 10%, rates are significantly lower than what it costs to borrow on credit cards, which charge roughly 20%, on average. Fewer banks offered this option during the height of the Covid pandemic, when lenders tightened their standards to reduce their risk. Access to HELOCs has improved, although the most preferable terms still go to borrowers with higher credit scores and lower debt-to-income ratios.
"Not only can qualifying for a home equity loan be more challenging than qualifying for other types of debt, defaulting on a home equity loan can have serious negative consequences," Channel said. In some extreme instances, defaulting on a home equity loan can mean that you'll lose your house, he noted.
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