HELOC 101

Want to know the inside-scoop on taking out a HELOC? These six quick lessons will make you a HELOC expert in no time. Learn how to find a fair HELOC loan, negotiate terms with your lender, and qualify for a competitive interest rate.

Lesson 1:

How a HELOC Works

Lesson 4:

Find the Best HELOC Rates

Lesson 2:

Is a HELOC Right for You?

Lesson 5:

Truth in Lending

Lesson 3:

Qualify for a HELOC

Lesson 6:

Common HELOC Questions

New: Facing a HELOC Freeze? Here's Where to Send Your Complaints

List of Non-Recourse States

Posted on 21 April 2010

Sign Of The Times - ForeclosureEven if your home is sold in foreclosure, you may still be on the hook for the difference between the amount you owe the bank and the amount the property sold for. Years later, the bank may come after your paycheck to recoup there losses.

Unless, of course, you live in a non-recourse state.

In non-recourse states, homeowners cannot be held personally liable for more than a forclosed property sells for. The debt is completely satisfied at the time of sale and lenders cannot sue to make up for lost funds. To learn more, take a look at this list of non-recourse states.

Keep in mind that laws change from time to time and that state code can be complicated to understand. If you’re facing foreclosure, consult with an attorney before making any decision based on potential recourse.

Creative Commons License photo credit: respres

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What Happens to a HELOC in Foreclosure?

Posted on 14 April 2010

Foreclosure Notice April 14, 20102

Foreclosures seem to be slowing, but the country still isn’t in the clear. If your home is in danger of facing foreclosure becuase of a HELOC in default, it’s important to have some idea of what the bank will do. Here are the five primary ways HELOC foreclosure situations play out:

  1. The homeowner is given permission to offer a short-sale.
  2. The homeowner is given permission to offer a short-sale because the primary mortgage holder offers a monetary incentive to the HELOC lender.
  3. The primary lender forces a foreclosure.
  4. The HELOC lender forces a foreclosure.
  5. The HELOC lender purchases the primary loan.

Each of these five possibilities offers unique benefits and drawbacks to the homeowner. Take a look at the article HELOC Foreclosure to learn more about how to make the most of your situation in each possibility.

Creative Commons License photo credit: stevendepolo

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HELOC Taxes: Borrow Money, Deduct Your Interest

Posted on 21 March 2010

fastest refunds

HELOC tax deductions could save you thousands when you file. To put it simply: If your HELOC was used to improve your home, you may deduct interest on lines up to $1 million ($500,000 married filing separately). If your HELOC used for other purposes, you may deduct interest on lines up to $100,000 ($50,000 married filing separately).

Although borrowing money in the form of a HELOC is riskier than taking out a traditional loan (i.e. your home must be used as collateral), the tax deduction is a huge incentive. Check out the article HELOC Taxes to learn more about how to qualify for some IRS relief.

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Florida Legislator Condemns Banks that Deny HELOCs, Hoard Money

Posted on 19 February 2010

golden-dollar-signsFlorida’s new Senate President is speaking out against banks that hoard federal bailout money while simultaneously reducing customer’s HELOC lines.

A recent release from his office explains:

“…Mike Haridopolos today called for hearings in Tallassee to investigate claims that after banks received hundreds of billions in federal bailout money they squeezed consumers and fraudulently or arbitrarily reduced Home Equity Lines of Credit (HELOC) to improve their own bottom lines.

‘I have heard the stories of this happening across our state and our country, and the courts are filled with lawsuits,’ says Haridopolos (R-Merritt Island). ‘This needs to be investigated because if true it’s outrageous. The very banks that are bailed out with taxpayers’ money then stick it to homeowners?’

Haridopolos is calling for hearings in Florida and is also asking that Congress investigate the claims of wrongful HELOC suspensions.

See Also:

How to Protect Your Credit in Case of a HELOC Freeze

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Class Action Suit Filed Against Chase for HELOC Freezes

Posted on 15 February 2010

Foreclosure AuctionChase Manhattan Bank is currently facing a class action suit after freezing a few too many HELOC lines. The lead plantiff, Mary Yakas, filed the suit after her HELOC was frozen in late 2008 based on Chase’s Automated Valuation Model.

Courthouse News Service reports:

“Yakas filed a class action, alleging breach of contract and unjust enrichment. She said Chase breached the HELOC in three ways: by failing to obtain an appraisal by a licensed appraiser, by using the unreliable AVM to assess her property value and by charging her a $20 annual fee after it suspended her credit line.”

It’s about time that someone stood up for HELOC borrowers’ rights. Lenders can certainly limit or even freeze HELOC lines if there is not sufficient equity remaining in a property. However, it is unfair to freeze HELOCs in batches or based on these so-called “automated valuations” that do not require any actual appraisals or personal considerations.

Creative Commons License photo credit: The-Lane-Team

See Also:

HELOC Freeze Help

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Your HELOC and Your "Portfolio of Debt"

Posted on 12 February 2010

debt-signNew credit card legislation takes effect later this month. However, borrowers have already encountered negative consequences from the more stringent requirements including reduced lines, higher fees, and increased interest rates.

Borrowers dealing with undesirable changes from their credit card issuers may be able to mitigate some of these problems by transferring their debt to a HELOC.

Reuters explains:

View your credit cards and other loans, such as a home equity line of credit (HELOC), as a portfolio of debt, just as you would consider all of your retirement accounts to be an investment portfolio. Make decisions based on the portfolio in its entirety. That may mean diversifying — setting aside one card for some uses and another for different uses. Or shifting balances from a high-interest rate card to a low-interest HELOC.”

Grouping all these lending products together as your “portfoilo of debt” is an excellent way to add some perspective to the situation. By considering your HELOC alongside your credit cards, you can easily compare interest rates, fees, and other features. Often, you’ll find that you can save hundreds or even thousands by transferring debt from a high-interest credit card to a low-interest HELOC.

See Also:

Is a HELOC Right for You?

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