Help for Struggling Borrowers Facing a Reset on Home Equity Lines of Credit
What is a HELOC reset?
In the years 2004 to 2007 the majority of home equity lines of credit (HELOC) loans were originated for homeowners. Typically a HELOC only requires that the homeowner make the interest-only payments for the first ten years of the loan. After ten years the loan matures and now the fully amortized payment is due in order to begin paying off the loan over time. Unfortunately, that means the new “reset” payments can be several times larger than the interest-only payments causing the homeowner a financial hardship when faced with paying the higher second mortgage payments.
How to handle a HELOC reset
If your HELOC has or is about to reset causing your mortgage payments to increase, there may be government programs or mortgage relief options available to you. Among the possible solutions, the most popular are:
- Second lien forgiveness
- HARP 2.0 refinance for underwater mortgages
- Second mortgage loan modification
Where to get help
Go to HELOChelp.org to get more information and frequently asked questions on mortgage resets. As a HUD-approved housing counseling agency, credit.org offers free one-on-one assistance if you are facing a financial hardship from a HELOC reset. When you call, your counselor will help determine which mortgage relief programs you quality for and then help you apply for them.
Priority HELOC counseling from credit.org will get you:
- A priority counseling request
- A customized action plan
- Personal assistance in applying for any mortgage relief options that you qualify for