Rules effecting Home equity line of credit in effect soon
As I had previously posted, the mortgage rules regarding lending practices by the regulated financial institutions will come in effect on October 31st, 2102. These rules essentially limit the availability of funds through your line of credit to 65% of the value of your home rather than the 80% that is now typically available. While 80% would still be available, any amount provided over 65% would need to have a scheduled payment plan associated with it and not have the option to pay interest only on any amounts borrowed as HELOCS typically do now.
Its not unusual that lenders effected by these rules to implement them earlier than required so don't be surprised to see the changes sooner than October 31st. A HELOC can be extremely useful to:
Pay off higher interest dent
Have as an emergency fund
A low interest source of funds for investments
If you are considering a HELOC for up to 80% of the value of your home, or are considering changes to an existing HELOC you may have, it would be wise to do it sooner rather than later.