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<March 2015>



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As Home Equity Lending Heats Up How Do I Select the Best Option?

By David Yanagisawa, Executive Vice President and Chief Lending Officer

Home equity lending is starting to make a comeback. Many lenders are reporting substantial increases in home equity lending over the past year with Equifax reporting that the total number of home equity loans approved in the fourth quarter of 2012 represented a 19 percent increase over the same period in 20111.

What’s driving this up-tick? Home prices are beginning to stabilize and even increase which is restoring consumer confidence in the real estate market.

There are two types of home-equity lending. Home equity lines of credit (HELOC) carry variable rates and give borrowers the flexibility to borrow up to the full amount of the loan or just a portion. A HELOC functions like a credit card. Home equity loans (HELOAN) carry fixed rates and are structured like a mortgage, with a borrower receiving a set amount and making a fixed payment each month. Some of the most significant differences between HELOCs and HELOANs are displayed below. For more details on the differences between a HELOAN and a HELOC visit this blog by Lakeland Bank’s Regional President and COO Robert Vandenbergh.

While lending is increasing, qualifying standards for home equity loans and lines of credit are still much tighter than they were during the previous real estate boom. Homeowners are also being more cautious about their reasons for borrowing against their home. Instead of seeking a loan to fund vacations or other lifestyle expenditures, they are being used for things like funding home improvements, education costs, or medical expenses.

Do you have a child heading to college? Are you planning a major home renovation or looking for a way to consolidate your debt? Once you’ve weighed your options carefully and decided to borrow against your home’s equity, this blog post can help you determine which financial vehicle is the best choice.

We would be happy to answer any questions you have about HELOCs and HELOANs. Simply call Lakeland Bank at 866-224-1379 or visit any of our branch locations. For a limited time, we are offering a promotion on HELOCs that you can read more about on our website.

1Haverkamp, Kirk. “Are home equity loans coming back?” February 12, 2013. Americanownews.com.

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