Is It True That My Home Equity Line of Credit (HELOC) Can Be ‘Frozen’?
Yes. HELOCs, 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 using 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.
Although Incline Village has not experienced quite the decline in real estate values as some areas, you should be aware that access to your HELOC may be at risk. Your financial security and success are important to me. Feel free to call to discuss your options in this rapidly changing marketplace. |
