Real estate appraisals were out of control there is no doubt, and changes were made to prevent estimates from being put into unrealistic ranges. There is no doubt that home values are in danger, and with prices falling it’s hurting more than just the seller’s pocketbook. Computerized home appraisals are making waves in that several models are contributing to the information that comes back. In some cases it may be true that the values of homes run through these systems may be rendered undervalue.
So, while some homeowners think this is ideal in that they feel they would get lower taxes, the challenge is greater for those who have equity lines of credit attached to their homes. When loan companies offer these lines of credit, it is possible that they could in fact put a freeze on that line of credit. The real issue? Not only is freezing that line of a credit frustrating for the borrower, but what if you already have estimates and have put down a deposit on home repairs using this line of credit? You have workers coming to work on your home and you have already written the first installment from that line of credit on your repairs. Also, when getting estimates double check with the contractor, but in most cases deposits or partial payments are non-refundable.
The best thing to do is to ask if you are in the middle of a big job, or if you speculate that there might be an issue. Writing a check that won’t be honored and one you didn’t know about can be embarrassing, but can cause huge problems along with more fees that you weren’t prepared to paid. After all that is why you took out the line of credit; you wanted to let the equity you thought you had in your home work for you.
-Mayer Dallal
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