Editor’s Notes: With the increasing numbers of foreclosures and the financial side of the real estate industry being under strain, there have been cases where banks would freeze homeowners’ lines of credit from their home’s equity. The banks have said that they have sent out notices in the mail, but there are chances that you missed them. If you’re having problems with your home’s equity, look below for tips to solve this dilemma.

If your home-equity line of credit has been frozen, and you need access to the funds, borrowers can follow these steps:

1. Take the lead and call your lender. Ask why the available credit has been reduced, and explain why you think it shouldn’t have been, Mr. Hebron said. It’s helpful to know your loan-to-value ratio, your credit score and your debt-to-income ratio to discuss your individual situation, he added.

EN: http://www.freecreditreport.com/ Go here to find out your current credit score.

2. Be prepared to have your home reappraised. If you argue that the value of the home hasn’t dropped as much as others in the area, be prepared to spend a few hundred dollars on having your home appraised, Mr. McBride said. You’ll need that for verification that your situation is different from your neighbors’.

EN: If you’ve been living in your house for a couple years with no problems, it’s a good time to be extra cautious and have an appraisal done. Not only will you receive the benefit of having the valuation of your house at this time, but you’ll be able to find out the condition of your home and if everything’s in working order.

3. Take your business elsewhere. If the current lender isn’t budging, look for another, Mr. Hebron said. There are still lenders out there for those with good credit and equity built up in their homes, Mr. McBride said.

EN: All lenders are not equal. There are some lenders that are under great stress at this time (Wells Fargo), and there are others that are more flexible to work out a deal that’s positive for both parties. You might even be able to finalize with an attractive interest rate.

4. Be prepared to shop around. 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, said Ellen Bitton, chief executive of New York-based Park Ave Mortgage Group. That’s logical, Mr. McBride said: If a home is foreclosed on, the second lien often becomes a complete loss for a lender.

EN: Thanks to the internet, we can save much time with tools out in cyberspace. Check out Zillow Mortgages to input your specifics and get quotes from dozens of lenders.

5. Start saving. If the reason you were holding a home-equity line of credit is to have it for a rainy day, start creating an emergency fund instead, Mr. McBride said. Too many people have been “dining at the home-equity buffet for too long,” he said. For some, a frozen credit line may be a wake-up call to start living within their means.

EN: If you need any help with this line of credit matter, please feel free to leave a comment below and I’ll do my best to help you and solve your problem. Or you can call me directly at (520) 869-5174 or email at ronpark @ tredaily.com

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