Just need opinions here, 'cause I'm not a happy camper. Last week we went to our local BofA office where we do all our business and know the bank manager etc etc. All in all a very happy place every time we go there (we get hugs from our banker and all, welcome to the South).

We had a HELOC of $132k because of a substantial down payment we made when we purchased our current home through them. Now my DW and I are thinking of going into real estate. We needed financing, and didn't want to get a mortgage for every single property we would purchase to fix up. So we explored the idea of increasing the line of credit on our HELOC.

Originally we had a variable rate equal to Prime. Now, however, we have an increased HELOC of $197k but they have increased the rate to P+1.49% as well. I am not a happy camper. Is this standard practice?
All we wanted was a CLI on a secured loan of which the underlying collateral has increased in value. Why up the interest rate? ARGGG..

What are you thoughts.. is this normal?

Might want to ask mods/admin to move this to mortgage forum...

Mm.. good point, I forgot we had one

So... you actually increased the credit limit? Was there paperwork involved in this? Was the rate increase in this paperwork?

I've seen some banks have varying rates on mortage products depending on LTV, so maybe this is a result of that.

I'd offer to trade some hugs for a lower rate.

Yes. The limit went up because of the property appreciation, and the continued payment of principal on the mortgage. The process isn't completed yet: they need to have a "closing", and file the paperwork with the court house to update the lien (2nd mortgage) monetary amount BofA has on our property.
The paperwork does state the new limit, and the new rate. I like the limit, but I hate rate.

I heard back from my BofA contact last week. The issue is LTV. We used to have a HELOC that didn't max out the actual equity left in the house. For that reason, we got the low rate we had. Now, with our request for a CLI, the HELOC will be taking up 100% of the equity in our house.

EasyRhino nailed it Hundred percent LTV equals a higher APR on the HELOC. It sucks, but it makes sense.

We did get another 0.25% off the margin because my wife is a health care professional. If you sign up for any kind of loan product (other then CC's), make sure you ask about that program if you're eligible for it. They do this for teachers, law enforcement officers, firefighters, and health care workers.

Our APR now 9.24%. This rate includes three discounts:
- Banking relationship with BofA (we're "advantage" customers since we have a mortgage there as well): -0.25%
- Automatic HELOC payments setup out of my BofA checking account: -0.25%
- Neighborhood Champion program: -0.25%

There will be another -0.25% effective upon funding of the loan, because we will be taking out $25,000 out of our HELOC immediately.
I forgot to ask if me being a volunteer firefighter would give us another 0.25%, but I doubt it.

Spread the word about these discounts! Specially the neighborhood champ program!