A lot of homeowners are drooling over recent rate cuts and considering jumping on the refinance band-wagon. If these low rates are tempting you as well, be aware that your home equity line of credit could impede your decision to refinance.

In order to change the original loan, you need to get permission from the secondary lien holder (your HELOC lender). Before the credit crisis this was pretty much never an issue. But now some HELOC lenders are declining permission, with the hopes that borrowers will close their lines of credit in order to refinance.

Permission is less likely to be granted if your the value of home’s in your neighborhood have significantly declined or if the lender identifies you as a high-risk borrower. If this happens to you, you’ll have to decide which is more important: refinancing at a lower rate or holding

Tags | Heloc, home equity line of credit, refinancing