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Seems to me the most likely emergency requiring use of the HELOC also involves loss of my job. My understanding was that the agreements generally give the bank wide ranging powers to limit my usage of the credit line and we're seeing some of this in the market with banks freezing HELOCs in down real estate markets. My own line is well coverered by the equity in my house, even if prices fall a lot, so I think that is not going to be a problem, unless they start unilaterally freezing and exiting the HELOC business. Probably that's unlikely. Even so, I wouldn't plan to draw their attention to my loss of a job, if that's why I need to access the line.
But the job connection is still a concern. I have the equity to open a new line if the bank does the unexpected with the old one. But presumably that would only be needed at the same time I'm looking for emergency cash due to job loss. Will banks open new HELOC for someone with no employment, but with plenty of equity? If that's possible, then I think leaving the HELOC as emergency fund is still a viable solution. If loss of job means exposure to cutting off current line and impossible to get a new one, then I don't think this plan will work for me. Anyone know if sufficient equity can get one a HELOC even if temporarily unemployed?
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