Is Your Home Equity Line of Credit Safe?

Look at your needs

If you'll have to access the funds from your existing HELOC in the next few weeks, consider withdrawing what you need and stashing it in a high-yield money market account or short-term certificate of deposit, or CD. This is a valid approach only if you have known expenses, like college tuition or a renovation that is already underway. But bear in mind that once you withdraw the money, interest charges and debt payments will start up.

If the HELOC is for emergency purposes only, consider working to set aside a rainy day fund instead of borrowing one. After all, tackling a financial problem with more debt isn't a good long-term solution.

Thaw your HELOC

If the bank has already frozen your HELOC, or is planning to, it needs to provide a reason. If it's due to a change in home value, hire an appraiser to do a sales comparison. If you think the bank has a lowball value for your home, paying for a $500 appraisal may be an easy way of regaining access to the frozen funds. If the freeze is due to a drop in your credit score, check your credit reports for any errors at AnnualCreditReport.com. Consider compromising with your lender: Rather than freezing the line of credit, it may be willing to accept lowering the credit limit below its new loan-to-value standards.