I was listening to the radio the other morning when a frantic young woman called in with her sad story about her home being worth $100,000 less than what she paid for it and additionally her $100,000 home equity loan was coming due in 2012. She wanted to know if she could refinance the home equity into her mortgage, what would happen when the term was up and what to do today to prepare for what was about to happen in the near future. Would they call the loan due? She was frightened and did not know where to turn for advice.
I too have a home equity loan. Frankly, I never really thought about it coming to the end of its term. I found my paperwork and realized mine was due in 2013. As a realtor I felt a bit weird that I did not have this information firmly implanted in my brain. I began to think of how I would pay this off in the next two years. I thought about refinancing which would be one option since I do not have a first mortgage only the home equity and then realized I had missed a critical step which was a visit to my lender asking what the process was when the 10 year term came to an end. Interestingly for me, my term had been extended 5 years and I realized I had some time of my loan, but it started the process.
If you are in this situation, call your lender, make an appointment. Go in and sit down and get the facts. Action rather than projection will give you the information you need and hopefully a plan of action. These are difficult times; in the case of the woman who called the radio station, a short sale might be her only option. It is not good news but at least knowing in advance is a way of preparing for the inevitable. It might be time to call your Realtor and discuss your situation.
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