Thousands of borrowers have already received HELCO freeze notices. If you’ve escaped the HELOC freeze so far, it may be time to evaluate your finances and figure out how a frozen home equity line would affect you.

Examiner.com reports:

“…What is the purpose of the HELOC? If it’s a rainy day fund like it is for my client, then the impact is low if a bank cancels a HELOC. If someone is using their HELOC to finish a major home remodel, then the impact of a freeze would be large. If you’re in the situation where you need the HELOC now, please see a competent financial professional who can help you figure out the costs and risks of taking on more debt right now.”

In some cases, borrowers are withdrawing funds from their home equity lines of credit to avoid the consequences of a potential freeze in the future. However, this option can be unnecessary and costly for many homeowners. Taking the time to analyze your situation can help you make the best decision.

photo credit: diegodacal

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Tags | Heloc, heloc freeze, heloc loans, home equity line of credit, mortgage crisis