I have a friend who used the bonus from his law firm to pay down his Home Equity Line of Credit (HELOC). He and his wife toasted their fiscal responsibility for taking the windfall of extra money and applying it all to debt, instead of squirrelling it away or spending it on a vacation to Tahiti. They felt confident with this decision knowing if they needed the extra dough they could pull the money back out of the house through their equity line.
At least it sounded like a good idea a the time. Little did they know their bank would almost immediately reduce their equity line limit to a number only slightly above their outstanding balance. Read on for some helpful advice on what to do if your lender cuts, or even worse, cuts off your HELOC.
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