Your equity is one of the best reasons why you should own a property as soon as possible. Aside from having a house to stay until you grow old, or at least during vacation, your property could be used to gain access to credit that may not be possible or too costly when you use unsecured loans.

By using your equity, you get to have a secured loan with better payment terms as well as better interest rate. The property value is always your ticket in accessing loans so that you can support needs that requires high funding.

Unfortunately, the current economic crunch has left those who are opting to use their home equity helpless. Banks and other financial institutions are not granting as many loans as they used to. For those who are approved, they experience a lowered credit line. That means you could end up being denied to a loan or you could only loan a small amount.

The following are the reasons why credit based on your equity is not possible or lowered:

• Real Estate Situation in Your Area – Even though your property didn’t experience a drop in value in recent months, banks and other financial institutions will take a look at the general situation in your city or even state. If there’s a considerable drop in the value of prices in property in you area, there’s a chance that you can only access a portion of your equity. Two years ago, you can get a 100% loan on your equity. Today, you can count yourself lucky if you can access 80% of your property value.

• Your Credit Rating – Another reason why banks might be hesitant in providing you with loan based on the value of your property is your credit score. Normally, banks will not care about your credit rating – they will just seize your property if you are unable to pay for your loan. But in today’s situation wherein there is an increase in rate of foreclosure in most states, lenders do not want to be tied up with another property or even in loan modification.

So there is an internal (your credit rating) and external factor (real estate industry) that affects your access to your line of credit based on your equity. Based on these factors, you can figure out your plan of action on how you can maximize your credit line on your equity.

But there is a catch – You have to act as soon as possible especially when you are up for a renewal in your line of credit on equity. Waiting for the deadline is a very dangerous situation. When the lender declares that you do not have any access to credit anymore based on your equity, you can’t do anything else. If you act now, you can still appeal to the lenders if you still have time left before the renewal on your equity credit starts.

For the meantime, the following are steps on how you can increase the possibility of an approved credit the next time your equity line renews:

• Know the Situation – Get in touch with a real estate agent for an honest evaluation of your property. You may not know it but the general real estate scenario in your area may have been going down for the past few months. This will affect the value of your property as well.

• Prevent Too Many Debts – Aside from prevention of financial disaster, debts should be cleared and prevented as much as possible so that lenders will allow you to gain credit. If you can be trusted in terms of payment, lenders will have no problem providing you with a loan.