NY Daily News reports:

“Looking to get a loan for school? A car? A house? Fat chance.

Billions of dollars have flowed into bank vaults, but billions of dollars are not flowing out, at least not to borrowers — at least not yet.

Most banks are making fewer loans and employing stricter standards on borrowers than they did a year ago, despite the multi-billion dollar bailout of the financial industry.”

On the positive side, many major lenders such as Countrywide are continuing to advertise for new HELOC customers. Most lenders only want the best-of-the-best, but they’re willing to put some money in to find these credit worthy clients.

photo credit: TheTruthAbout…

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Will Federal Rate Cuts Affect Your HELOC APR?

According to the March edition of Kiplinger’s Personal Finance,  these rate cuts come at a time when HELOC lending standards are tightening – making it more difficult for borrowers to take out a loan.

Here are some of new lending requirements:

No more automated appraisals.  Lenders are wary about appraising properties for more than they’re worth; in this declining market most lenders require an appraiser to do a physical property walk through before awarding a HELOC.

Decreased loan-to-value ratio. Gone are the days when borrowers could take out 100% of their equity in a HELOC. Now, it’s practically impossible to get a HELOC for over 90% of your equity’s value. HELOCs offering just 65% of the equity’s value are commonplace.

Good credit becomes necessary. Lenders are becoming less willing to work with bad credit customers. In order to qualify for a traditional HELOC, most borrowers need a credit score above 680.

Check out the full Kiplinger article for more details. See also: How to Get the Best HELOC Rates and Terms.