April 20, 2009

Tough Times for Getting a Home Equity Loan

Home equity lines of credit (or HELOCs in industry parlance) have gotten harder to get and more expensive when you can get them, according to an article in yesterday's New York Times. The reason is pretty straightforward: "As the economy and housing market declined, it made little sense for banks to lend money on an asset that was becoming less valuable by the week, and in an environment where borrowers had a diminishing ability to repay." At this point, you'll need to have a credit score of 720 or better and be able to prove that you've still got 20 percent equity left in your house or apartment; and if the debt service on the HELOC you're seeking combined with your existing mortgage payments would consume more than 38 percent of your income, you're likely to strike out. The Times also says that HELOC rates in New York are now around 5.4 percent. Have any readers tried to get a loan like this recently?
Why Credit Lines Are Drying Up [NY Times]
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Posted by Brownstoner at 9:30 AM | Comments (4)
Categories: Mortgage

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