Things really are crazy now for sure- I am the one who posted before out my HELOC getting frozen right in the middle of my major house renovation. I decided to contact another bank for a new HELOC, and at the same time went down the path with my existing bank providing a new appraisel. Before we did our renovation, we had two realtors come to our home to advise us on what houses were selling for in like size, condition to ours, and what they thought the renovation might add. They both replied with a number that was very close to each other, assuming that things do not change too much (we live in a very desirable part of town, that did not get the huge run up on prices and no big drops lately). Then, the appraisor gave us another number, about 20% lower than the realtors but high enough to continue our HELOC if our original bank actually wants to do so. Then, the new bank denied us a HELOC, stating that their compturized valuation came in too low- It was so low it was laughable- it was almost half lower than our actual appraisel. Now, I understand being conservative, but that is ridiculous. I almost wonder it they had the wrong house. As by chance, on the same day the county sent us our new assessment, which went up by 10% of course. At this point, our contractor has to be paid and the original bank is taking forever to review our new appraisel and I am about done with the whole thing. We are very fortunate in that I am going to be able to sell enough stock to cover what we owe, but it was not what I planned when I started this whole thing, and I hate putting so much more cash into the house. Even with the HELOC, we would have been at 80% LTV, and now we will be more like 60%. We don't plan to sell for at least 10 years, so at least I can enjoy my investment :)

Hi jubileej, Something simple is missing here; It doesn't matter WHAT you choose to call the loan... "equity loan" or "construction loan" or "renovation loan" etc. You are ALWAYS borrowing against the remaining equity. I'd suggest getting a properly structured renovation loan in place. A good loan officer will walk you through the paces, which (in itself) will help gel your working plans & budgets, and FINALLY bring the project to completion for you. Getting the project done all in one coordinated process will be cheaper and less stressful to you overall, and then you will finally be able to get a standard, long-term financial plan in place. Luck! Dave Donhoff Strategic Equity & Mortgage Planner

Hi Flyleft, should we be taking advantage of the lower rate to pay down the capital and raise the equity in our home? ?????? HUH???????? How can you take advantage of a lower HELOC rate (supposedly by drawing on it,) AND SIMULTANEOUSLY increase the equity accrued in the real estate value of your portfolio? When you draw on the HELOC, you are transferring equity from your real estate OUTWARDS to some other account... no? Or should we take advantage of the lower rate to make lower payments and keep available cash around? If you are the financially mature type, I am a big proponent of optimizing your liquidity and keeping your equity value more safely seperated from your illiquid assets (especially real estate.) Prime is currently at 4.0%... and as wild as it sounds, many are predicting the Fed to drop it again as much as an additonal THREE QUARTERS OF A POINT this coming week... to 3.25%. After your 3/4 slice-away, you're pre-tax costs of leverage on that HELOC will be just 2.5%. If you combined federal & state marginal tax bracket is, say, 25%... that would make your post-tax cost of marginal leverage just 1.875% Even if looked at as the insurance costs of cash-on-hand, that is a very low premium for safety. Luck, Dave Donhoff Leverage Planner

Roxyl, we are doing this now (closing next month) - we will not draw the money out until closing. Our house is not going on the market until we close - but our mortgage broker said that was not an issue (we are not on the market now). There is a prepayment penalty with ours if we pay off in less than 3 yrs of $500. What our broker recommended is that if we pay it off (we plan to when we sell our house) then he advised us not "close out" the line of credit (leave it open) - that way it is free for the first year, second year charge is $75, third year is $75 - total $150 vs the $500 charge if we call them to officially close the loan off their books. After that the HELOC closes automatically after 3 yrs unless we extend the term. Good question about how the open HELOC would affect credit (even if the balance is $0) - thank you - I will ask our broker that in the morning!!