HELOC Frostbite — OUCH

[stop_the_bubble_hype]

So today we returned after a long weekend away and checked the mail. We saw an envelope from Countrywide and knew exactly what it was — HELOC Freeze notice. We have (err had) about $70K available on an $84K line.

It was quite a shocker and I couldn’t help but think about those who actually need to use their lines. I personally think it’s good to get rid of the glut of these so people can get back to basics and actually build equity, but this has to have some negative impact on the economy .

While we had no plans to use it, we liked the added credit line security and the boost it provided to our credit rating. The thought of being dinged on credit due to this is where the sting comes in.

I wanted to know if others know if a freeze = lowering of the available line or if it just means you have no access to the line even though the available amount remains the same.

Thanks!

[EconProf]

BobS
Undoubtedly your line of credit has been permanently reduced to the new amount.
I had two big HOLOCs with WaMu that were more than cut in half a few months ago. Both were unused at the time, but I was hoping to use them some time in the future for investments, so it was kind of a blow.
Fearing a repeat, I recently drew them both down to the max and put them into a 3% money market account in a credit union. Am paying about 6% for the HELOCs, so the net cost of keeping this liquidity is about 3%.

[EconProf]

BobS
Undoubtedly your line of credit has been permanently reduced to the new amount.
I had two big HOLOCs with WaMu that were more than cut in half a few months ago. Both were unused at the time, but I was hoping to use them some time in the future for investments, so it was kind of a blow.
Fearing a repeat, I recently drew them both down to the max and put them into a 3% money market account in a credit union. Am paying about 6% for the HELOCs, so the net cost of keeping this liquidity is about 3%.

[EconProf]

BobS
Undoubtedly your line of credit has been permanently reduced to the new amount.
I had two big HOLOCs with WaMu that were more than cut in half a few months ago. Both were unused at the time, but I was hoping to use them some time in the future for investments, so it was kind of a blow.
Fearing a repeat, I recently drew them both down to the max and put them into a 3% money market account in a credit union. Am paying about 6% for the HELOCs, so the net cost of keeping this liquidity is about 3%.

[EconProf]

BobS
Undoubtedly your line of credit has been permanently reduced to the new amount.
I had two big HOLOCs with WaMu that were more than cut in half a few months ago. Both were unused at the time, but I was hoping to use them some time in the future for investments, so it was kind of a blow.
Fearing a repeat, I recently drew them both down to the max and put them into a 3% money market account in a credit union. Am paying about 6% for the HELOCs, so the net cost of keeping this liquidity is about 3%.

[EconProf]

BobS
Undoubtedly your line of credit has been permanently reduced to the new amount.
I had two big HOLOCs with WaMu that were more than cut in half a few months ago. Both were unused at the time, but I was hoping to use them some time in the future for investments, so it was kind of a blow.
Fearing a repeat, I recently drew them both down to the max and put them into a 3% money market account in a credit union. Am paying about 6% for the HELOCs, so the net cost of keeping this liquidity is about 3%.

[GoUSC]

BobS try again on that one big guy.

Cost of money 6%
Inflation 4%
Return (3%)

So your real cost of that money is 7%. Just to have some cash on hand.

Wow. Just unbelievable.

[GoUSC]

BobS try again on that one big guy.

Cost of money 6%
Inflation 4%
Return (3%)

So your real cost of that money is 7%. Just to have some cash on hand.

Wow. Just unbelievable.

[GoUSC]

BobS try again on that one big guy.

Cost of money 6%
Inflation 4%
Return (3%)

So your real cost of that money is 7%. Just to have some cash on hand.

Wow. Just unbelievable.

[GoUSC]

BobS try again on that one big guy.

Cost of money 6%
Inflation 4%
Return (3%)

So your real cost of that money is 7%. Just to have some cash on hand.

Wow. Just unbelievable.

[GoUSC]

BobS try again on that one big guy.

Cost of money 6%
Inflation 4%
Return (3%)

So your real cost of that money is 7%. Just to have some cash on hand.

Wow. Just unbelievable.

[EconProf]

BobS
Uh, actually no, Radelow.
I am paying the bank 6% to rent the money.
I am investing it at 3%.
My true cost is a net of 3%.

Get out a paper and pencil and do the numbers for $100,OOO for one year.

[EconProf]

BobS
Uh, actually no, Radelow.
I am paying the bank 6% to rent the money.
I am investing it at 3%.
My true cost is a net of 3%.

Get out a paper and pencil and do the numbers for $100,OOO for one year.

[EconProf]

BobS
Uh, actually no, Radelow.
I am paying the bank 6% to rent the money.
I am investing it at 3%.
My true cost is a net of 3%.

Get out a paper and pencil and do the numbers for $100,OOO for one year.

[EconProf]

BobS
Uh, actually no, Radelow.
I am paying the bank 6% to rent the money.
I am investing it at 3%.
My true cost is a net of 3%.

Get out a paper and pencil and do the numbers for $100,OOO for one year.

[Author]

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