Individual investors are using a variety of methods to obtain needed funds for investing in real estate. Those methods range from loans against the equity in their residence to tapping into their retirement accounts.

Driving the trend is a strong desire to take advantage of today's hot and growing real estate market, especially buying bargain-priced homes for use as rentals or for reselling. Low prices and low financing costs make such investments very appealing.

"We're seeing many people cash out 401(k)s or IRAs because they want to take advantage of the market," said Sean Galaris with LM Funding, a financial services firm, as reported by CNN/Money. "This new scenario involves people losing significant personal funds since they are financing real estate through retirement accounts, savings, and life insurance."

Tax attorney Adam Bergman with IRA Financial Group, said he gets many calls each day from clients who are looking to invest retirement funds in the housing market, the report continued.

"Our average client has retirement accounts of about $150,000 and is looking to buy one or two properties," Bergman said. "After 2008, they didn't trust Wall Street. They wanted hard assets."

Such an action can be risky if the investor quits or loses his job. Any unpaid part of the loan will be subject to income tax as well as a possible 10 percent early withdrawal penalty.

"Also, housing prices are on the rise in many areas and investors need to make sure they don't overpay for a property and can still get suitable returns from their investment," the report advised.

Q: Are mortgage rates still rising?

A: Yes. On May 30, Freddie Macy released the results of its Primary Mortgage Market Survey, showing fixed mortgage rates following long-term government bond yields higher.

The average 30-year fixed moved up nearly half a percentage point since the beginning of May when it averaged 3.35 percent. Regardless, mortgage rates remain low historically helping to keep home-buyer affordability high, which should continue to aid home sales and construction as the housing market continues to recover, Freddie Mac noted.

Q: How do economists feel about the current housing market?

A: Generally, they are very bullish on the market. Housing sales last month rose to the highest level in more than three years, extending gains in residential real estate that are giving the U.S. expansion a lift, economists said as noted by Real Trends.

"Combined purchases of new and existing residences climbed to a 5.41 million annualized rate last month, the highest since November 2009, according to the median forecast of economists surveyed by Bloomberg ahead of figures from the National Association of Realtors and the U.S. Department of Commerce," the report stated.

Q: Are underwater homes now seeing improvement?

A: Yes, many previously underwater homes are now rising in value, and the share of REO sales registered in the single-digits for the first time in more than five years.

In California, for example, the share of equity sales — or non-distressed property sales — now make up more than three-fourths of total sales, the highest share since February 2008. The share of equity sales in April increased to 75.6 percent, up from 72.1 percent in March.

Equity sales made up more than half (54.2 percent) of all sales in April 2012, according to the California Association of Realtors.

Q: Are many homeowners using their increased equity to purchase another home?

A: Despite the fact that the national negative equity rate is falling, millions of homeowners with mortgages that are no longer underwater still lack enough equity even if they wanted to move.

According to a report from Zillow, 13 million homeowners — accounting for 25.4 percent of all homeowners with a mortgage — were underwater in 2013. However, another 18.2 percent of mortgage borrowers, or 9 million homeowners, while not technically underwater, likely do not have sufficient equity to afford to purchase a new home.

"When including homeowners with less than 20 percent home equity, the 'effective' negative equity rate is 43.6 percent, resulting in a total of 22.3 million homeowners. In realistic terms, this means these homeowners don't have the ability to put a 20 percent downpayment on a new house, therefore tying them to their current property and contributing to inventory shortages," the report stated.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.