Most people apply for a loan when they need it, but there are good reasons to apply for one when you don't.
Getting a Home Equity Line Of Credit (HELOC) is somewhat simple under normal circumstances, but getting one when you are in a desperate situation may be next to impossible.
During our last hurricane season, many homes were stricken by the devastating effects of Hurricanes Katrina and Wilma and while insurance agencies made a great effort to rush adjusters to the affected areas and cut checks to homeowners as diligently as possible, many homeowners waited for months before getting a dime and many others, while lucky to get their payments right away, lacked the funds to pay for deductibles or pay in advance before being refunded by their insurance companies. After a natural disaster, insurance companies stop underwriting and banks stop generating loans pending thorough inspections of the home securing the loan.
But hurricanes are not the only reason why you would be denied for a loan that you may have been given under other circumstances. Losing your job may cause you to not qualify for a loan, but had you gotten it while you were still employed, the funds already available could keep you afloat while you find an alternate source of income.
This is why it is such a wonderful idea to have a HELOC in place before you need it. A HELOC is a loan secured by the value of your home, but it does not have to be used if you don't want to, much like a credit card in that sense. If you do not use the funds available, you do not pay interest and you do not make payments. You can just have the loan in place, available for when you do need it or want it.
