They’ve Frozen my Home Equity Line of Credit
April 20, 2008
If you're new here, I invite you to subscribe to my RSS feed. Thanks for visiting!
This is part of our Financial Literacy Month Question and Answer series
Question: Cindy, I just received a letter from my bank that they’ve frozen my home equity line of credit. I have great credit and always make my payments on time. What’s going on? ~ Sally and Jim
Answer: Dear Sally and Jim, I think many people are going to be hearing this same line from their bankers because of the sub-prime mess.
When you apply for a home equity line of credit (HELOC), the bank will look at the value of the property and allow you to borrow a certain amount of the equity. (Equity is how much you own in the property). However, if home prices in your area are dropping (and who’s aren’t?), then you may not own as much equity. As a matter of fact, if you owe more than you own, it’s known as being “under water”.
This all makes lenders very nervous and they’re response is to freeze your line of credit. But, you can ask your lender to review your individual situation. If you still have lots of equity in your home, are paying on time and have a good credit score, they have the option of unfreezing your home equity line of credit for you.
The other alternative is to seek out a new lender. I highly recommend ING Direct (www.INGDirect.com) for equity lines and savings accounts.
As a home owner in these tough times, you (and the bank) want to make sure that you don’t owe more than your home is worth and that you don’t get into a situation where you can’t pay your mortgage.
If you are in either of these situations, call me for a consultation so you can get back into positive territory and protect the investment you’ve made in your home.
Warmly, Cindy
Similar Posts
- Low Rates for Emergency Savings?
- ING Increases CD Rates
- Emergencies!
- Take Your Money And Run?
- Should I invest?
Comments
Got something to say?
