NEW YORK (MainStreet) – A whole lot of U.S. homeowners are seeing their home equity recover from the housing crisis, but does that mean a home equity loan is in order?

Even with a stable housing market, it depends on your circumstances.

According to the National Association of Realtors, the median existing home price of $228,700 in August was 4.7% higher than it was in August 2014. That marked nearly four consecutive years of price increases, even as the interest rate on a 30-year fixed-rate mortgage actually lowered from 3.94% on October 6, 2011 to 3.85% on October 1 of this year, according to Freddie Mac. According to National Association of Realtors chief economist Lawrence Yun, even a Fed rate hike won't change that.

"When the Federal Reserve decides to lift short–term rates — likely later this year — the impact on mortgage rates and overall housing demand will likely not be pronounced," Yun said at the release of August's existing-home data. "With job growth holding steady, prospective buyers can handle any gradual rise in mortgage rates — especially if today's stronger labor market finally leads to a boost in wages and homebuilding accelerates to alleviate supply shortages and slow price growth in some markets."

At the height of the U.S. housing crisis in 2012, according to RealtyTrac, more than 12.8 million U.S. homeowners (29%) were seriously underwater — owing far more on their mortgages than their properties were worth. That number has dropped to roughly 7 million (13% of all homeowners) while the number of equity-rich homes (with at least 50% positive equity) has climbed to more than 11 million, or 20% of all properties.

“Median home prices nationwide bottomed out in March 2012 and since then have increased 35%, lifting 5.8 million homeowners out of seriously underwater territory,” says Daren Blomquist, vice president at RealtyTrac. “While the remaining seriously underwater properties continue to be a millstone around the neck of some local markets, the growing number of equity rich homeowners should help counteract the downward pull of negative equity in many markets, empowering those housing markets — and by extension their local economies — to walk on water in 2015.”

As RealtyTrac notes, though, not all markets are so lucky. Sure, San Jose (2% underwater), Denver (4%), Portland, Ore. (5%), Minneapolis (5%), Boston (5%), San Francisco (5%), Pittsburgh (6%), Houston (8%), Dallas (8%) and Seattle (9%) have recovered. Even properties in some stage of foreclosure have positive equity, especially in Pittsburgh (81%), Oklahoma City (76%), Austin, Texas (73%), Nashville (70%), San Antonio (63%) and San Francisco (62%).

That said, there are still markets with lots of underwater property. Las Vegas (30%), Orlando (26%), Tampa (25%), Jacksonville, Fla., (24%), Cleveland (24%), Miami (24%), Detroit (2%) and Chicago (22%) are among the worst, with more than half of foreclosed homes in Jacksonville, Tampa and Las Vegas underwater.

As a result, home equity lines of credit dropped $19 billion in 2014 to $510 billion of all U.S. debt, according to the Federal Reserve Bank of New York. That's less than U.S. credit card debt ($700 billion), auto loan debt ($9.55 billion), student loan debt ($1.16 trillion) and mortgage debt ($8.17 trillion). It was also the only large segment of U.S. debt to decrease in 2014. Both borrowers and lenders seemed to take a lesson from the housing crisis and ensuing economic collapse.

“Consumers are borrowing against their home in a more responsible way than they perhaps did in the past, and while conditions are favorable for potential [home equity line of credit] HELOC borrowers, homeowners should know that there are some tougher standards in place and that they are securing their home with the HELOC,” says Brendan Coughlin, president of consumer lending at Citizens Bank. “For qualified borrowers, it is a great time to consider tapping into their equity to make home improvements, consolidate high interest debt or to help pay for unexpected expenses.”

Though the qualification hurdle is much higher than it was before the housing crisis, a home equity loan may be preferable to other options including home refinancing -- which has tightened rules of its own. However, if your financial institution can give you a better rate on a home equity loan than you're currently receiving on your other debt, it may make sense to use the former to pay off the latter.

“For instance, auto loans and credit cards often have high interest rates, and you may be able to use a HELOC to consolidate your debt into one payment with a much better interest rate,” says Coughlin. “The cost of college is something that continues to rise and while there are several loan options available to students, using a HELOC is another option to help pay for college.”

Chris Abts, president and founder of Cornerstone Retirement Group in Reno, Nev., earlier this year showed clients who were sending a child to college the tax repercussions of early withdrawal from their retirement fund -- which they were considering as a means of paying tuition. He multiplied it over four years, showed them how much federal grant and student loan money it would disqualify them for and then suggested they consider a home equity line of credit. He noted that they could use it as a tax writeoff rather than a penalty, they'd pay at a lower rate than their retirement withdrawal would earn over the same period and they could pay on a flexible schedule based according to their means.

Abts notes that if you need to take $35,000 out of your retirement account, you would actually need to need to take out $50,000 to cover the tax hit and 10% penalty for withdrawing before age 59 and a half. That $50,000, at a 7% rate of return, would double in just ten years if you left it alone.

“Another great benefit to a HELOC is that in certain cases the interest you pay can be tax deductible but customers should be sure to consult with a tax specialist to assess their individual circumstances,” Citizens' Coughlin says. “Having a HELOC can be helpful for those unexpected expenses that often seem to arise.”

Even if homeowners are reluctant to spend their home equity, having a line of credit open can be more helpful than they'd imagine. Kevin Murphy, senior financial services consultant at McGraw-Hill Federal Credit Union in East Windsor, N.J., says homeowners can open a home equity line of credit and refrain from using it unless absolutely necessary. In the event of an emergency, it can serve as a last-resort loan for unexpected financial disasters. This is especially useful for retirees, whose finances and options tend to be more limited.

Murphy notes that there's no cost to open a line of credit and you won't incur any cost for keeping it open rather than waiting until the last minute. Anthony D. Criscuolo, certified financial planner with Palisades Hudson Financial Group in Fort Lauderdale, notes that a home equity line of credit can serve as a last-ditch emergency fund in a worst-case scenario where there aren't a whole lot of options available.

“It may be too late to apply for a credit card with no income and no assets, so having one or two backup lines of credit in place before an emergency is a good idea,” Criscuolo says. “The best options are usually a credit card with no annual fee or a home equity line of credit.”

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.