Bright spots in home-equity loans

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Homeowner equity rose by nearly $4 trillion in the 2 years that ended 2013, or an average of $54,000 per homeowner, according to Federal Reserve. The rise in home values is a particular boon to people who seek to refinance a home-equity loan, because the rise in value means that more people are eligible to borrow against their home’s value than at any time since the 2008–2009 housing bust.

Office of the Comptroller of the Currency projects that $167 billion of loans that originated during the housing bubble will reset over the next 3 years, $23 billion of it in 2014. Consequently, borrowers must start to make principal payments, which will raise monthly payments by hundreds of dollars. Of course, you should pay off your principal, but if you can’t afford to, you’ll want to look into refinancing into a new loan.