The new home equity loans

By Marcie Geffner -

Home equity loans used to be all the rage. Then they got a bad rap. Now they're back in style, but with some twists intended to make them safer for lenders and borrowers alike.

Equity loans are cyclical largely because they track the housing market. When prices rise, homeowners have more equity to borrow against. When they fall, the opposite is true.

For the 12-month period which ended February 2013, a composite of 20 major U.S. cities posted price increases of 9.3 percent, the highest annual growth rate since May 2006, according to the S&P Case-Shiller Home Price Indices. Consider that and it's clear why home equity loans "are making a comeback," says Neena Vlamis, president of A and N Mortgage Services in Chicago.

Still, these loans aren't the free money they were often perceived to be during the equity-rich housing boom of the early-2000s, says Kelly Kockos, senior vice president and home equity products manager at Wells Fargo in San Francisco.

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