So you’ve decided to make some home improvements; after all, you probably have to stay in your current residence longer than you previously thought, so why not turn it into the home you would have moved into had the housing market not crashed? This makes perfect sense, especially if you have a line of credit with your bank and you are a customer in good standing. But hold on a minute, because some banks are now starting to freeze those lines of credit, in light of the current economic situation our country is in. Ok, so what are you supposed to do now?
Well, according to Banks including Bank of America Corp. and Washington Mutual Inc., there is a process in place for customers to appeal these decisions. Washington Mutual spokeswoman Sara Gaugl said clients who have had lines decreased often still have access to available credit. “If the homeowner feels their situation is different, we will listen to them, particularly if they have an independent real estate appraisal that shows their home has been spared from neighboring drops in home value,” Bank of America spokesman David Bradley said. But, that may be easier said than done, especially with the housing market being what it is. It’s so frustrating to have to keep readjusting your priorities, when your bank keeps changing the rules on homeowners.
And what happens if you are already in the middle of a renovation to your home, only to find out you can’t count on those funds from your line of credit? Well, if you find yourself stuck in yet other crises caused by the crash of the housing market, here are a few suggestions.
The first thing you should do is call your lender and ask them why they have reduced your line of credit. Explain to the lender that you feel your loan-to-value ratio, which is your credit score and debt-to-income ration, should warrant the credit be extended to you. Don’t assume your lender will already know this, they are in a mad scramble to try and stop their financial hemorrhaging and may not take the time to look at every clients situation on a case-by-case bases.
Another thing homeowner may have to do is get their home reappraised by a real estate appraiser. The mortgage lender will probably want proof that the homes in your area are selling for what you say they are and an official report researched by an experienced appraiser will help reassure them.
If the current lender isn’t budging, look for another. Just because the current lender you are with isn’t willing to budge doesn’t mean others out there won’t, especially if you have good credit. If you do change lenders, be prepared for a longer process. Getting a line of credit these days is almost more challenging than getting a new first mortgage, so you have to be willing to be patient. Keep in mind that another mortgage lender will most definitely want a new appraisal for you home, so hiring a real estate appraiser will be a must for this one.
I’m not going to lie; the housing market is a mess right now. But that doesn’t mean you have to throw in the towel, especially if you are one of the lucky few who are financially stable. Talk to your mortgage lender and make sure they haven’t frozen their client’s lines of credit, before you begin a renovation. If they have, and you still want to revamp your old living quarters, try giving my suggestions a go…after all, the worst thing they can tell you is no.
If you are thinking about changing lender, refinancing your home or simply want to figure out the current value of your home, please visit us at Mahler & Associates Appraisals, we can help you with all your appraisal needs.