A home equity line of credit can give you a financial cushion in case of emergency or to make some major repairs in an older home. Lenders are tightening their rules about accessing a home equity line of credit. By being persistent and willing to compromise, you may find it easier to gain access to your cash.

Appeal

When lenders cancel your home equity line, you should receive a letter explaining the reason for the cancellation, and how you can appeal. A mistake may have been made on your credit report, lowering your credit score. Request a free copy of your credit report from the three largest credit bureaus: Experian, Equifax and TransUnion. If you find a mistake, ask that it be corrected, and then notify the lender, who may reinstate your home equity line. It may be necessary to hire an appraiser who is approved by your lender to prove that your house has not declined in value. Expect to pay at least a few hundred dollars. If your home is worth more than the balance on your primary mortgage, you may qualify for an increased home equity line of credit.

Ask for a Lower Credit Line

If the lender denies your appeal, ask if you can access a lower credit line instead of having your home equity canceled. You'll have a better chance of the lender granting your request if your first mortgage is through that particular lender.

Withdraw Your Cash

You may be finishing a home renovation project, and now the lender is threatening to cancel your home equity line. Withdraw a lump sum immediately, but don't take more cash than you need to finish your project. Put the cash in a high interest savings account or certificate of deposit until your bills are due. You'll have to pay interest now, and your home equity line will be reduced. If home values keep declining, you may owe more than your house is worth.

Refinance with a Different Lender

Compare the rates of several lenders. Most lenders have websites you can access online and toll-free numbers you can call for information. If you find a better rate, ask to refinance with that lender. According to Greg McBride, Senior Financial Analyst at Bankrate.com, receiving approval to refinance may require that you show proof of income and have a good credit history. Your new lender may require you to pay a fee to refinance, but it may be possible to pay off your old home equity with your new home equity line.

Source:

Consumer Reports: What To Do If Your Home Equity Line is Iced

Money.CNN.com: When A Home Equity Line Freezes Over

More Information:

Free Credit Report.com: Know Your Credit Score