We have stated in previous articles and blog posts that lenders reserve the right to freeze a line of credit on property that has been damaged in the aftermath of a hurricane. If the lender's collateral is no longer there or is damaged, then they may not allow homeowners to access the available credit when a homeowner may need it most. According to our friend, though, his line of credit was frozen due to a drop in property value - even though there is nothing wrong with the home.
We have said it countless times before - money in property is not the same thing as money in the bank. It may not be there to "withdraw" via a loan or line of credit when you need it most. Thankfully, our friend wasn't put in jeopardy by this situation, but there may be people who are using their line of credit as a savings "account" and have their money in the line of credit instead of the bank. If the bulk of someone's savings is suddenly trapped in their home, it could be devastating for them.
Right now, with the market in flux, the safest place to have your money is where you can get it easily - in the bank or some other account instead of your house. If you were planning on using money from an equity line of credit some time this year or next, you should really look at the option of taking it out of the property now. Perhaps using a larger first mortgage product - rates are very low right now on fixed rate loans. Just don't leave yourself at the mercy of bank policies that will be aimed at protecting their interest instead of yours.
Craig Garcia is recognized as one of the Nation's leading experts on Mortgage and Equity Management. He is a Licensed Mortgage Lender who has been helping consumers with financing solutions for over the past ten years.
He has created a service that caters to homeowners and purchasers who are frustrated with strict bank lending practices and are rightfully mistrustful of mortgage brokers but who still want to finance their home confidently. His service helps consumers find a mortgage that helps them manage their equity and monthly budget most effectively with their financial goals. More information and resources can be found at Florida Mortgages and Hard Equity Loans.This article is free for republishing
Source: http://www.articlealley.com/article_456962_19.html
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