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You have had your home equity line of credit (HELOC) for years without an issue, but now you have received a letter from your lender stating that your funds have been reduced or frozen. Before you can decide what you want to do, you have to understand what it means.
A HELOC freeze means that, beginning at the time of the notice, your line of credit is frozen, and you can no longer draw funds from your HELOC. A HELOC reduction occurs when there is a reduction in the credit limit on your home equity line. There are a number of reasons either of these changes in borrowing status can occur, and they are typically decided on a case-by-case basis.
Your lender will do periodic reviews of your home equity line(s) and will also continuously evaluate your ability to make payments. If any of the conditions that existed at the time you secured the loan change significantly, your HELOC can be subject to a freeze or HELOC reduction. Some of the most common reasons for an adjustment in your borrowing power are:
You have options if you are informed of a home equity line freeze or reduction. First, make sure that even during the freeze you continue to meet the payment conditions of your loan. While you can't draw on the line during a freeze, you're still expected to pay back what you have already borrowed.
Second, investigate the reason for the freeze and make an appeal if you feel the information is incorrect or changes again. It is always smart to talk to your lender directly about the reasons behind changes on your account.
Whether you are a current Citizens Bank HELOC customer with questions about your account or interested in applying for a line of credit, we can help. You can start the home equity line of credit application process by answering a few questions online, and a Home Loan Advisor will contact you by the end of the next business day to complete your application and walk you through the next steps in the process.
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