Part of saving money is making sure that you take advantage of your equity when it makes the most sense. One trend that we've been learning about here at MetroDealz is that due to the banking crisis some banks are flat out canceling line of credit and home equity loans - even for those with perfect and near perfect credit ratings who have already been approved. I am aware of at least two different friends who have recently undertaken new construction, such as remodeling their home, or adding another story to their home, and who have previously successfully secured a home equity or line of credit loan against their property (usually their primary residence). We've been hearing that after taking out a certain amount of money, or not using their LOC or equity loan that the bank has notified them that their loan is being canceled. This is definitely a scary experience when you are in the middle of construction to find out that you no longer have the funds available to continue the project.

A friend of mine who is adding a second story on his house went back to his bank to get a home equity loan and he was told that with a credit rating of around 690 that his credit is no longer considered good enough to be approved for a loan. Luckily for this friend he is a professional and was able to get a loan against his business from which he was able to continue his construction project.

So, in today's new financial times, don't be surprised if your bank should call you to notify you that they are canceling your already approved loan. It's become much more of a commonplace happening nowadays. What can you do to protect the equity loan that you've already secured? You may want to consider taking the money out when you can and putting it aside. One option would be to take the money out and put it aside in a medium-term CD that pays near, or even sometimes, higher interest than the current rate you'll have to repay on your equity loan. Since many equity loans are based on the prime rate, and the prime rate being fairly low at the moment, this may not be a bad option. BUT, you must watch the prime rate like a hawk for any movement upwards that will affect your rates. Consider a CD which is more fluid and may allow for you to take your money out without penalties in case you should need to quickly pay back your equity loan.

As with any financial undertaking be sure to thoroughly discuss this option with your investment professional. Your particular financial situation may not be conducive to doing this, and you must of course check with the rules of your loan to make sure you aren't breaking any regulations or requirements that your lender may require. The financial crisis has certainly turned this into a "use it or lose it" scenario.