My husband and I bought our first home on the South Shore of Long Island, in Western Suffolk County in early 2008. It was in move-in condition compared to many of the other homes we looked at in our price range. There are upgrades we want to do however (i.e. new kitchen, new living room, siding, move around the front door and windows, etc.).
We decided a couple weeks ago that we would apply for a home equity line of credit through our mortgage company, so we could do the work at our pace, and be able to pay off the credit at a quicker pace vs. taking out a home equity loan with a large lump sum of $$$$$ and a larger interest rate. We also wanted to go this route so we didn't have to touch our savings account ever.
Anyways, I got a phone call from the bank on Friday that we had been DENIED. The reason had nothing to do with our joint income, or credit. Both are excellent. We also have no debt besides our mortgage and my student loans.
The bank said however that it's this housing market-----we have no equity in our house and the overall value has decreased by about $110K.
That was VERY discouraging and depressing to hear.
But I can understand.
I decided to apply for a Home Depot credit card which is interest free if you pay it off within 6 months. I was approved for a very modest credit limit, but I guess everything happens for a reason. Approving HELOCs for many people in the past is one major reason the housing market is the way it is now.
I am hopeful and optimistic though, especially living where we live, that the housing market will turn around and the value of our home will increase. Especially if we are able to explore our options down the road and come up with a way to put in the major improvements.