How to Dump a Home Equity Loan

The U.S. Department of the Treasury reports that a home equity loan allows you to leverage your home's built-up equity. Banks, credit unions and other lending institutions may lend you money based on your credit and the equity in your home. However, the equity serves as collateral, making it difficult to simply "dump" the home equity loan. Defaulting on a home equity loan could lead to the lender foreclosing on your house -- a key reason why you should treat a home equity loan very seriously.

Instructions

1

Talk with your lender about why you are dissatisfied with the home equity loan. You may be dissatisfied because your credit line was frozen or reduced, or your interest rate has increased significantly. It's possible that the lender may be able to modify the loan to make the interest rate affordable. Or you may be given an opportunity to argue that your credit line should not have been frozen or reduced.

2

Visit with a nonprofit credit counselor if you are still not satisfied after meeting with the lender. Getting an objective opinion about your home equity loan could help shape your strategy as you prepare to get rid of the loan. Find a nonprofit credit counselor in your area by seeking a referral from a charitable organization such as the United Way or Salvation Army.

3

Dump your home equity loan by applying for -- and receiving -- a home equity loan from another lender. Use the proceeds to pay off your present home equity loan.