Help for Frozen HELOCs.

One of the most devastating consequences of the current mortgage crisis is the freezing of Home Equity Lines of Credit by their lenders.

Lately, a lot of homeowners – who usually use their HELOCs as ATMs – have discovered that their lenders have shutdown their lines of credit. Just at the time that these homeowners need money. And a lot of these borrowers don’t know what to do.

Well, according to a great article by Amy Hoak on MarketWatch.com, there are a few things that homeowners can do to help in these situations.

1. Call your lender
Find out why your available credit has been cut back and tell them why you think it shouldn’t have been reduced. Prepare yourself by knowing your credit score, loan-to-value ratio and debt-to-income value before you make the call.

2. Have your home reappraised
If you think that your home hasn’t dropped in value as much as others in your area, have it reappraised. It’ll cost a few hundred bucks, but it could be worth it.

3. Find another lender
If you have good credit and some equity built up in your home, you’ll probably be able to find another lender.

4. Shop around
Getting a HELOC now might be tougher and take longer than in the past. But you can use that time to shop around for the best deal.

5. Build an emergency fund
You probably look at your HELOC as an emergency fund. You know, money there when you desperately need it. Well, instead of relying on your HELOC, why not just save up for a emergency fund? This way, you’ll know that you have money there that no one else can freeze.