File this under "HARD TO BELIEVE" (but true!)
Do you have a Home Equity Line of Credit on your home?
How about on your rental home?
A HELOC can be a great way to tap into your home's equity. A HELOC is based on the Prime Rate. Some banks offer the ability to "fix" a portion of what you borrow at a specified rate. Remember, with a HELOC your payment is based on what you have borrowed not your limit.
Are you getting ready to start on that kitchen remodel?
Already picked out the appliances?
The Contractor is coming on Monday and wants a check for half?
No problem - Your HELOC gave you a Checkbook and a Debit Card.
Good for you!
Oh, you already have a HELOC?
You've had it for a couple of years now?
Always make your payments on time?
Even paid more towards the principal?
Good for you!
Well it turns out that due to deteriorating market conditions, declining home values, uncertain issues in the securities division, blah, blah blah...
We at "Guppy's Seafood and Lending" have just decided to FREEZE your HELOC!
We're sorry. Keep making the payments you've been making, we like that - but we're not lending you anymore money.
Cut up that Debit VISA Card we gave you.
Shred the book of Checks we sent you.
We just don't want to play anymore.
They can't do that can they?
Yes they can. In fact they are doing it! It isn't a matter of a little bank (like Guppy's) that's on the verge of going out of business.
Chase, (part of the 1.4 billion dollar JP Morgan company) is freezing HELOC accounts right now. Not to all borrowers, but those that they have determined are risky.
So if the homes in your area have declined in value - don't count on having that $100,000 Equity Line available. It might not be there when you want it.
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