Hey everyone, here’s a critical update on Coronavirus (COVID-19) impact on HELOCs. This past weekend, we’ve seen the Federal Reserve Rate go down to 0% in an effort to stimulate the economy and soften the damage that the fear has on the market. The Federal Government is looking to add more liquidity and pass legislation that would aid much of the people who were impacted negatively by the quarantine.
How to Pay off Your Mortgage in 5-7 Years: https://www.youtube.com/watch?v=3f-ebCjeH8o
HELOC Freezing During the Recession: https://www.youtube.com/watch?v=xaqcNUgc1T8
As of now (March 17th, 2020) the banks have not taken action to shut down existing HELOCs. I have not seen any freezing or cutting of HELOC limits. I personally believe that this won’t happen unless there’s a MAJOR economic apocalypse… But in case that happens, the first opinion I have is to reduce the HELOC usage limit down to 30% of the total limit. The second thing I would recommend is to reduce the overall LTV (Loan to Value) of the home to 70% or lower. Both measures will help protect your home and your finances when using this strategy.
The bigger issue right now is that the banks have slowed down in processing HELOC applications due to the onslaught of people looking to refinance and take out loans because they think they’re saving money on interest. We’ll have a video made for this topic as well (Refinancing During the Coronavirus) Some banks and credit unions have completely shut down any new applications coming in because they simply don’t have the manpower to deal with the volume of new applicants