Your Home Equity Line of Credit: Late Payments Can Shut You Down

By Gina Pogol
Mortgage Credit Problems Columnist

Do you know how much home equity you have? This week? With roller-coasting home values, lenders tightening, loosening, and re-tightening credit standards, with investors demanding accountability, and government throwing ever more money and legislation at the problem, the little homeowner at the bottom just wants to know how much money he has.

Take Credit Before it Takes You

Lenders are getting pickier about who they lend to. And how much they lend--not long ago, you might have borrowed over 100% of your home's value. Now you'd be lucky to get 85%. And your "iffy" credit might have squeaked by under old standards but it won't pass muster now. It's time to take action--save your loan and your credit!

If you had good credit when you got your HELOC, and now you have not-so-good credit, your best bet is to cash out that equity while you still have access to it. It might not be there too long. And pay your mortgages on time and before any other bill--late or missed payments are not only bad news for your credit rating; they can result in your lender turning off the home equity tap. No matter what your original limit or agreement was.

Beg if You Have To

If your home equity line of credit gets reduced or shut off, you can appeal the lender's decision. Here's where paying your bills on time could pay off--if your credit and payment history with this lender are good, and you can show that YOUR home has not decreased in value (real estate agents and online home value calculators can help), you might get your old limit back. Then grab the cash and make your payments on time religiously.

There Goes the Neighborhood….and its Home Equity

Keep an eye on home values in your area. If "For Sale" and "Bank Owned" signs are popping up faster than mushrooms in manure, your own equity could be in for a hit as well. So, if your kitchen has been gutted by remodelers, and you are counting on HELOC funds to finish the job, grab the money now and put it in an account. This guarantees you access to the cash when you need it. Of course, you must make payments on the loan starting now--if that's not possible you might have to live with a bomb-shelter kitchen for a while.

Source:
Newson6.com

About the Author
Gina Pogol has over a decade of mortgage lending experience, in addition to practice as a paralegal for a bankruptcy attorney, and as a business credit consultant for Experian. She is also certified to underwrite Fannie Mae loans. She earned her BS in Financial Management from the University of Nevada.

All information provided “as is” for informational purposes only, and is not financial advice. MortgageCreditProblems.com, its affiliates, and any of the independent providers of information on this site shall have no liability for any informational errors or incompleteness, or for any actions taken in reliance on information contained herein.

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