Home Equity Lines of Credit were a prevalent tool used by homeowners whose equity was growing like crazy in the real estate boom years. Many of these home equity lines of credit were set up with interest only payments for the first 10 years are beginning to reset now. A homeowner who had been chugging along paying minimum monthly interest only payments of $203 on their $75,000 balance based on the Wall Street Journal Prime Rate of 3.25% with zero margin may now be facing adjustable payments starting out at $527 for the next 15 years in order to pay that balance off.
Who thinks Prime Rates are going to increase and these payments along with it?
If you have one of these Home Equity Lines of Credit on your home, you may want to pull out that 
agreement, dust it off, and check on what you need to consider in your household budget for those resetting payments. If these payments are going to wreak havoc on that budget, you might want to be proactive about seeking a solution. Maybe refinancing your first mortgage with that home equity line of credit balance is the solution? Call me if you are in AL, AZ, CA, FL, GA, IA, IN, KY, MD, OH, OR, TN, TX, VA, WA, WI and we'll put our heads together and see if refinancing makes sense - especially if you are in one of the states hit hard by the real estate market crisis like Arizona, California, Florida, Georgia, Maryland or Oregon.
If refinancing is not a viable alternative for you and these looming higher payments aren't going to fit in your budget, best to reach out to the financial institution you are making those home equity line of credit payments to and see if they offer a financial hardship program such as “2MP” if the terms of your first mortgage were previously modified, or some other solution if you are likely to default on your payments when they reset.
Don’t wait until the last minute…best to address this issue head on.
See you out there!
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