How to Snare the Elusive Home-Equity Loan

Banks and other lending institutions have been lining up to announce that they have reduced the amount of credit available to consumers, including those who already hold home-equity lines of credit.

As a result, it's a bit tougher to get a home-equity line of credit, and if you already have one, your borrowing limit might suddenly shrink.

Washington Mutual(WM Quote - Cramer on WM - Stock Picks), Bank of America(BAC Quote - Cramer on BAC - Stock Picks) and Countrywide Financial(CFC Quote - Cramer on CFC - Stock Picks) are just three of the many lenders trying to limit their exposure to the significant industrywide losses resulting from the credit crisis. Estimates of overall losses range from $400 billion to as much as a trillion dollars.

If your bank has reduced the borrowing limit on your Heloc on the grounds that your home's value has declined, you can try to change the minds of the people there by making a case that your house is worth more than they think. That will require you to hire an appraiser -- which might be worthwhile if you think the bank is wrong.

If you are looking to open a new Heloc, you may have to settle for a lower limit on the amount you can borrow. Most lenders are lowering the loan-to-value (LTV) on the Helocs they are offering. That means consumers are allowed to borrow a smaller percentage of their home's equity (frequently around 80% these days). A few years back, the limit was more like 100% -- or even 125% in some cases.

If you're planning on applying for a Heloc, either to help pay for renovations or just to smooth out the ups-and-downs of the economic slowdown, you can check out some of the latest offers on BankingMyWay.com.

To start you off, here are some of the best rates available around the nation:

• In Albany, N.Y., TD Banknorth is offering a rate of 3.97% on lines of credit between $200,000 and $1,000,000 (up to 80% loan-to-value (LTV)) with an annual fee of $50.

• In Abilene, Texas, Bank of America is offering a rate of 4.99% on lines of credit between $100,000 and $300,000 (up to 80% LTV) with no annual fee.

• In Bradenton, Fla., GTE Federal Credit Union is offering a rate of 4.00% on lines of credit between $5,000 and $250,000 (up to 80% LTV) with no annual fee.

• In Garfield Heights, Ohio, Ohio Catholic Federal Credit Union is offering a rate of 3.74% on lines of credit between $5,000 and $50,000 (up to 80% LTV) with no annual fee.

• In Bensalem, Pa, Commerce Bank is offering a rate of 4.49% on lines of credit between $5,000 and $199,999 (up to 80% LTV) and a rate of 3.99% on lines of credit between $200,000 and $750,000 (up to 80% LTV). Neither offer imposes an annual fee.