During the real estate boom, lenders would regularly set HELOC caps above the home’s current value. Now, they’re reconsidering. MSNBC reports:

“Lenders periodically conduct “portfolio reviews” to examine whether the assets (in this case homes) against which they have extended credit have held their value, says Richard Hagar, an appraiser at American Home Appraisals in Mercer Island, Wash., who teaches courses on mortgage fraud.

In recent years, Hagar says lenders would loan up to 120 percent of a home’s value (up to 100 percent for a primary mortgage plus 20 percent for a home equity line). But now lenders have returned to their prior conservative metrics. This means they’ve capped lending for 90 percent of the home’s value, including the primary mortgage and home equity line. And they’re doing it at a time when many markets’ home values are declining.”

Some HELOC borrowers have been told they can only take out up to 60% of their home’s equity. Of course, these numbers are based on many variables including the borrower’s credit worthiness and the location of the property.

See Also:

HELOC Lenders Reporting Losses

How to Qualify for a HELOC 

Tags | Heloc, lenders, lending standards