There’s a growing trend among lenders that I feel compelled to tell you about.
Several major lenders are freezing withdrawals from Home Equity Lines of Credit (HELOC's) – and I don’t want you to be caught off guard by this development.
Don’t Get Burned by the HELOC Freeze
HELOC's, though secured by your real estate, are treated by lenders as consumer credit. And just as a lender can revise the terms of your credit cards, or even cancel them, the same can be done with your HELOC.
Previously, HELOC withdrawals were usually only frozen for reasons such as bankruptcy, declining credit and payment problems.
While these events can still cause a freeze, there’s another factor that lenders are considering more often today: the value of your property. You should be aware that the lender retains the right to suspend or reduce the line of credit available if your property value falls below the appraised value used to originate the loan. Lenders are actively assessing properties and then suspending access for account holders who have seen a downward slide in their home value.
If you’re in a market that has seen real estate values decline, then access to your HELOC may be at risk.
*One thing to keep in mind is that lenders have labeled all of California a declining state, which means that those who live in California and have HELOC's are at risk to the HELOC Freeze and this risk should be assumed and recognized.
Your financial security and success are my highest priority. Feel free to contact me to discuss your options and any other questions you may have so I can make sure that you are protected in this volatile market.
