The second mortgage market has not been very active in the past few years, but it appears to be back in the game according to recent home loan data. Smaller lenders such as SunTrust Bank, Associated Bank, and Citizens Bank have been dipping their toes back in home equity lending. The second half of 2010 saw a significant rise in home equity lending with SunTrust Bank’s issuing 25 percent more home equity lines of credit, Citizens Bank having a jump of 35 percent in HELOC origination, and Associated Bank tripling their issuance of home equity loans.
The game is a little different this time around. Home equity lending is offered to only the best borrowers that have at least a 720 FICO score, two years worth of income verification, and at least 20 percent equity in their homes. Home equity loans and HELOCS come at a high price with interest rates averaging 7.15 percent and 5.22 percent respectively. If you are able to qualify for home equity lending, it is said that going with a fixed rate is wise because interest rates are expected to rise.
Let’s see if other banks follow suit and enter the second mortgage market again in order to make home equity lending available to more homeowners.
Source: smartmoney.com
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