Dozens of major banks have frozen home equity lines of credit. Due to the large number of  frozen HELOCs, some financial advisers are recommending that homeowners tap their equity before it becomes too late.

Not everyone agrees, however. Some more conservative advisers suggest that homeowners wait it out and avoid taking out money prematurely.

Conde Nast’s Portfolio.com recently published a helpful article, detailing the pros and cons of withdrawing to avoid the freeze:

“So should you “tap that thang,” as Ritholtz urges? I’d probably say no, so long as you have significant positive equity in your home. (That is, more than the amount of the Heloc.) Chances are, your Heloc won’t be frozen. On the other hand, if your Heloc is large and your home equity is negative, borrowing the money now while you still can might be a sensible precaution. You’re unlikely to find money that cheap anywhere else.”

If you need that money in the coming months, you may want to withdraw. But, if you can avoid “living richly,” perhaps it’s better to keep the money in your home and skip the large monthly payments.

See Also:

5 Financially Sound Ways to Use Your HELOC

HELOC Truth in Lending Laws

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