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Dealing with Home Equity Lines of Credit in Today's Market

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By : Kristine Squiers    99 or more times read
With the home values in and around Ann Arbor dropping, many lenders are cutting off home equity lines of credit (HELOC). I know, I am one of those Ann Arbor area home owners who received a letter from my lender earlier this year - It wasn’t slashed for anything else except that my homes value had dropped significantly due to the current market and there was no longer the equity in the home to sustain the loan. In other words my lender was covering their ass-ets! It was aggravating to say the least, and I immediately wondered what it would do to my credit (not much really) but beyond that, for me anyway, it didn’t mean much.

For some Ann Arbor homeowners who may depend on that equity, having their HELOC monies pulled from under them may make a HUGE difference though! Don’t become one of the financially debilitated homeowners in the area when the rug is swept from beneath their feet - Stay on top of what information is available. Here are some of the the latest tips from the Federal Reserve in dealing with a frozen or diminished HELOC loan:

Call your lender ahead of time. When you were issued your home equity line of credit chances are your home value was much higher, so even if you have a good payment record call the bank early to inquire about the loan. You may want to take the money and run or choose otherwise, just keep in mind though that your lender may freeze or reduce your HELOC at any time.

Open and READ your mail. Unfortunately that means you’ll need to at least consider every piece of mail that comes from the bank - Yes even what appears to be the dreaded ”junk mail”. Your lender must provide written notice of any changes, including if they freeze or reduce the monies available to you in your HELOC loan.

Learn “Why” and “How” of things. The notice you receive from the bank will include specifics about “why” there was a change in your HELOC loan. Understanding the reasoning behind the change may help if you want to have your credit line reinstated. Technically, your lender must reinstate your HELOC when the conditions permitting the change no longer exist, however this likely won’t happen unless you take action to reinstate the loan - So find out how to reinstate the loan if you wish to do so!

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