Official HELOC (Home Equity Line of Credit) thread

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AndyBogleHeads
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by AndyBogleHeads »

If a borrower already have 1st and 2nd lien loans. When applied for a HELCO loan, does bank payoff the 2nd lien (assuming borrower qualifies) and issue new HELOC OR does bank reject the application stating borrower already has 2nd lien?

Based on that, I could apply for HELOC after paying off my 2nd lien vs applying for HELOC first and paying off my 2nd lien from HELOC loan proceeds. My credit union rep on phone did not know, she said it is possible that your application may get cancelled or rejected. She asked me to reach out to a special group that deals with HELOCs. Till I do that, I was curious if anyone had any experience that they can share.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by abuss368 »

Atlman66 wrote: Mon Jul 18, 2022 1:10 pm Hi,
Another data point for Third Federal

6/26 - Application submitted
6/28 - Appraisal completed
7/5 - HELOC approved
7/18 - Closed

Happened very quickly.

First post as well!
We had this experience (slightly faster but essentially the same), with Wells Fargo.

Easy and clean.

Tony
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cchrissyy
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by cchrissyy »

Data point for PNC
California primary residence
prime rate minus 0.16%
$0 closing costs
$50 annual fee


Applied May 25
Appraised May 27
....silence... it felt like no progress. there was no phone communication and the only email i got was requesting things i had already provided. their online tracker is junk and frankly i doubted it would ever happen
Final Approval July 18
They inform me of a 0.25% discount for linking a PNC checking account so i opened one
Closed July 22
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cchrissyy
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by cchrissyy »

AndyBogleHeads wrote: Fri Jul 22, 2022 5:29 pm If a borrower already have 1st and 2nd lien loans. When applied for a HELCO loan, does bank payoff the 2nd lien (assuming borrower qualifies) and issue new HELOC OR does bank reject the application stating borrower already has 2nd lien?
don't worry about being turned away.

the new HELOC bank will be delighted to pay off and close the existing credit line as part of setting up a new one with them.
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AndyBogleHeads
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by AndyBogleHeads »

cchrissyy wrote: Sun Jul 24, 2022 11:10 am
AndyBogleHeads wrote: Fri Jul 22, 2022 5:29 pm If a borrower already have 1st and 2nd lien loans. When applied for a HELCO loan, does bank payoff the 2nd lien (assuming borrower qualifies) and issue new HELOC OR does bank reject the application stating borrower already has 2nd lien?
don't worry about being turned away.

the new HELOC bank will be delighted to pay off and close the existing credit line as part of setting up a new one with them.
Thanks cchrissy for sharing the feedback. I was thinking the same, wanted experiences from folks here.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by topper1296 »

My plan was to use a HELOC from my current primary residence that is complete paid for as a down payment on a new primary residence that I would move into and then turn my current paid off place into a rental using a property manager that I would hire. I stated my intentions on the first email to a loan officer at US Bank. US Bank had me go thought the entire process of doing a hard inquiry credit check and uploading documents (I was asking for an amount of ~40% of the property value). Just a couple days ago, US Bank declined my HELOC request because they won't do a HELOC on a residence that will be used as a rental. If this is their policy, why have me go through the process when I stated my intention upfront? I'm pretty turned off with US Bank right now because of this (I'm also turned off that their hard credit inquiry will temporary ding my credit score that is in the 830's). Has anybody else had this happen to them? And does anybody know of a bank where I can do this? I don't have to have a HELOC to purchase a new home, but it would allow some extra flexibility.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by LittleMaggieMae »

My situation is complicated.
I have 40K remaining on an 80K Chase mortgage on my primary home (21 years left - on track for this to be a 15 year mortgage with prepayments).
I have a 30K BofA HELOC on primary home. (it's in year 8 - so 2 years before required repayment period
I have 145K remaining on a 156K Wells Fargo mortgage on another house.

I am working with BofA to replace the 30K HELOC on my primary home with a new 50K HELOC on my primary home.

Company: BofA
Mortgage + HELOC LTV: 50%
Interest Rate: (not sure what they will give me but was quoted a rate in the 2% range)
The loan will have a variable rate based on some fixed percent (which MIGHT be in the 2% range) + prime rate. None of this was in "writing" so I'm waiting to see what they offer me.

Draw period / repayment period: 10+20
Application fee: 0
Appraisal and any other fees: 0
Annual fee: 0
Has early termination fee (if closed in first three years).. $450

ADDED: I was told the process might take 12 to 16 weeks. :(

The application process was fairly easy. I'm hoping the fact that I want to REPLACE the old BofA HELOC is clearly indicated in my application documentation. I don't have much confidence in this - it's BofA.
Have provided requested documentation.
Haven't heard back about the application (it's only been 1 business day since providing the requested documentation) .
I'm not sure BofA even wants to deal with such a low limit HELOC (I'm hoping my long term relationship with them - gives some added weight to my application. )

One final ADD: Chase, Wells Fargo, and my local Savings and Loan are not offering HELOCs at this time.
Last edited by LittleMaggieMae on Mon Jul 25, 2022 8:54 am, edited 3 times in total.
Silk McCue
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by Silk McCue »

LittleMaggieMae wrote: Sun Jul 24, 2022 1:35 pm
Company: BofA
Mortgage + HELOC LTV: 50%
Interest Rate: (not sure what they will give me but was quoted a rate in the 2% range)
Draw period / repayment period: 10+20
Application fee: 0
Appraisal and any other fees: 0
Annual fee: 0
Has early termination fee (if closed in first three years).. $450
The 2% rate seems very unlikely/impossible based on current market conditions. I suggest you clarify the terms.

Cheers
giddyup969
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by giddyup969 »

8foot7 wrote: Fri Jul 01, 2022 7:20 am
giddyup969 wrote: Fri Jul 01, 2022 6:15 am Has anyone recently applied with Third Federal know how long the process takes to open the HELOC?
We were offered a HELOC with Third Federal at the time our first mortgage refinance with them was also approved.

Application on 2/27
Appraisal on 3/20
Appraisal results on 3/23
Underwriting approval for mortgage and HELOC 4/10
First mortgage closing 4/29
HELOC closing 6/17

They are very, very slow, not always communicative, but did what they said they would do and the rates are fantastic.

Just to provide an update. Applied with Third Federal on July 6th and currently scheduled for close on July 29th. Process was really smooth and got the full amount of $200k. Drive by appraisal.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by MillennialFinance19 »

Company: Ameris Bank
State of HELOC: GA
HELOC Amount: $195k
Mortgage + HELOC LTV: 80%
Interest Rate: 5.25%
Draw period / repayment period: 15
Application fee: 0
Appraisal and any other fees: 0
Annual fee: 0

No closing costs whatsoever.

Applied on 7/19, conditional approval on 7/22. Appraisal ordered on 7/22.
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bornto2
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by bornto2 »

Third Federal Update:
Despite language on their website to the contrary, Third Federal does not offer HELOCs on non-primary residences. This change went into effect April 2022 according to the representative.
exodusNH
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by exodusNH »

AndyBogleHeads wrote: Fri Jul 22, 2022 5:29 pm If a borrower already have 1st and 2nd lien loans. When applied for a HELCO loan, does bank payoff the 2nd lien (assuming borrower qualifies) and issue new HELOC OR does bank reject the application stating borrower already has 2nd lien?

Based on that, I could apply for HELOC after paying off my 2nd lien vs applying for HELOC first and paying off my 2nd lien from HELOC loan proceeds. My credit union rep on phone did not know, she said it is possible that your application may get cancelled or rejected. She asked me to reach out to a special group that deals with HELOCs. Till I do that, I was curious if anyone had any experience that they can share.
You can refi the existing HELOC with a new one. One thing to watch out for, though, is an early termination fee with the HELOC. There are costs some lenders absorb (e.g. recording fees from the county to update the deed), but claw back if you close the line within 1-3 years.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by LittleMaggieMae »

Silk McCue wrote: Sun Jul 24, 2022 2:59 pm
LittleMaggieMae wrote: Sun Jul 24, 2022 1:35 pm
Company: BofA
Mortgage + HELOC LTV: 50%
Interest Rate: (not sure what they will give me but was quoted a rate in the 2% range)
Draw period / repayment period: 10+20
Application fee: 0
Appraisal and any other fees: 0
Annual fee: 0
Has early termination fee (if closed in first three years).. $450
The 2% rate seems very unlikely/impossible based on current market conditions. I suggest you clarify the terms.

Cheers
Thanks! I did a typo. The loan will have a variable rate based on some fixed percent (which MIGHT be in the 2% range) + prime rate. None of this was in "writing" so I'm waiting to see what they offer me. I updated my post and added some fyi info about how long the process might take (12 weeks or more) and that chase and well fargo aren't offering HELOCs at this time.
Last edited by LittleMaggieMae on Mon Jul 25, 2022 8:56 am, edited 1 time in total.
exodusNH
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by exodusNH »

LittleMaggieMae wrote: Mon Jul 25, 2022 8:51 am
Silk McCue wrote: Sun Jul 24, 2022 2:59 pm
LittleMaggieMae wrote: Sun Jul 24, 2022 1:35 pm
Company: BofA
Mortgage + HELOC LTV: 50%
Interest Rate: (not sure what they will give me but was quoted a rate in the 2% range)
Draw period / repayment period: 10+20
Application fee: 0
Appraisal and any other fees: 0
Annual fee: 0
Has early termination fee (if closed in first three years).. $450
The 2% rate seems very unlikely/impossible based on current market conditions. I suggest you clarify the terms.

Cheers
Thanks! I did a typo. The loan will have a variable rate based on some fixed percent (which MIGHT be in the 2% range) + prime rate. None of this was in "writing" so I'm waiting to see what they offer me.
My small BOA HELOC is at 6.31% right now.
jharkin
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by jharkin »

Yep, looks like you guys are getting prime PLUS 2%.

Note that if you are not closed yet and Third Federal makes loans in your state you might want to talk to them. Mine is still at 3.74%.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by Silk McCue »

LittleMaggieMae wrote: Mon Jul 25, 2022 8:51 am
Silk McCue wrote: Sun Jul 24, 2022 2:59 pm
LittleMaggieMae wrote: Sun Jul 24, 2022 1:35 pm
Company: BofA
Mortgage + HELOC LTV: 50%
Interest Rate: (not sure what they will give me but was quoted a rate in the 2% range)
Draw period / repayment period: 10+20
Application fee: 0
Appraisal and any other fees: 0
Annual fee: 0
Has early termination fee (if closed in first three years).. $450
The 2% rate seems very unlikely/impossible based on current market conditions. I suggest you clarify the terms.

Cheers
Thanks! I did a typo. The loan will have a variable rate based on some fixed percent (which MIGHT be in the 2% range) + prime rate. None of this was in "writing" so I'm waiting to see what they offer me. I updated my post and added some fyi info about how long the process might take (12 weeks or more) and that chase and well fargo aren't offering HELOCs at this time.
My ThirdFederal HELOC is Prime -1.01%. Rate as of today 3.74%.

Cheers
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by willthrill81 »

Silk McCue wrote: Mon Jul 25, 2022 12:32 pm My ThirdFederal HELOC is Prime -1.01%. Rate as of today 3.74%.
Very nice. Ours with Third Fed is Prime-.26%, but I'm still happy with it.

When I worked in mortgage servicing, I once came across a variable rate mortgage whose interest rate was zero. It was taken out in the 1980s and tied to an index that had dropped so much that the mortgage rate was zero, and the mortgage holder couldn't believe it, but it was true.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by femur »

I'm thinking about getting a HELOC to use as a part of my emergency fund (yes, I know in times of market stress they can be closed/canceled) and to provide liquidity for some future home upgrades.

What is the mechanism for drawing from a HELOC? Can I write checks against it or is there a debit card connected to it? Can I just call the bank and say "please draw $20k from my HELOC and put it in my checking account"?

Thanks!
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by exodusNH »

femur wrote: Mon Jul 25, 2022 1:31 pm I'm thinking about getting a HELOC to use as a part of my emergency fund (yes, I know in times of market stress they can be closed/canceled) and to provide liquidity for some future home upgrades.

What is the mechanism for drawing from a HELOC? Can I write checks against it or is there a debit card connected to it? Can I just call the bank and say "please draw $20k from my HELOC and put it in my checking account"?

Thanks!
It depends on the provider. With BoA, you can transfer funds from the line to a checking account. I think they also offered a debit card.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by willthrill81 »

femur wrote: Mon Jul 25, 2022 1:31 pm I'm thinking about getting a HELOC to use as a part of my emergency fund (yes, I know in times of market stress they can be closed/canceled) and to provide liquidity for some future home upgrades.

What is the mechanism for drawing from a HELOC? Can I write checks against it or is there a debit card connected to it? Can I just call the bank and say "please draw $20k from my HELOC and put it in my checking account"?

Thanks!
With ours at Third Federal, we can either write checks against it or use a debit card with a $10k daily limit. Calling any financial institution to move money is difficult these days due to all the fraud protections in place. I learned this the hard way last year.
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8foot7
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by 8foot7 »

Third Federal sent us a book of checks that clear directly as draws on the line. Used one this week. I don’t know if we’re getting a card or not, but I can’t imagine personally a scenario when we’d prefer to use a card that draws on the HELOC where we wouldn’t prefer to use a rewards card instead and then pay it off from a HeLOC draw.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by giddyup969 »

8foot7 wrote: Mon Jul 25, 2022 1:52 pm Third Federal sent us a book of checks that clear directly as draws on the line. Used one this week. I don’t know if we’re getting a card or not, but I can’t imagine personally a scenario when we’d prefer to use a card that draws on the HELOC where we wouldn’t prefer to use a rewards card instead and then pay it off from a HeLOC draw.
How do you pay it back once drawn? Does third federal have an online portal or do we have to send them checks ?
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by LittleMaggieMae »

femur wrote: Mon Jul 25, 2022 1:31 pm I'm thinking about getting a HELOC to use as a part of my emergency fund (yes, I know in times of market stress they can be closed/canceled) and to provide liquidity for some future home upgrades.

What is the mechanism for drawing from a HELOC? Can I write checks against it or is there a debit card connected to it? Can I just call the bank and say "please draw $20k from my HELOC and put it in my checking account"?

Thanks!
This is a good question to ask when you are talking with a lender about their HELOC's.

It could be a lot of different ways (sometimes all of them):
Debit Card that's issued to you when you "close" on the loan.
Write a check (you may be issued a handful of checks to use when you close on the loan. You can also have checks made (think CheckWorks or ChexInTheMail) if you need LOTS of checks - probably not that common today. If you run out of lender provided checks you can ask for another handful of them. )
on-line transfer you can move money from the line of credit account to your checking account for example.

FWIW: I consider my HELOC as something I could use in an emergency. It's the best way I can have a check for up to 25K (current HELOC) in an envelop in a suitcase by midnight tonight. Not that that has ever happened....
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8foot7
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by 8foot7 »

giddyup969 wrote: Mon Jul 25, 2022 1:56 pm
8foot7 wrote: Mon Jul 25, 2022 1:52 pm Third Federal sent us a book of checks that clear directly as draws on the line. Used one this week. I don’t know if we’re getting a card or not, but I can’t imagine personally a scenario when we’d prefer to use a card that draws on the HELOC where we wouldn’t prefer to use a rewards card instead and then pay it off from a HeLOC draw.
How do you pay it back once drawn? Does third federal have an online portal or do we have to send them checks ?
They have an online portal but I plan to use bill pay through my bank, as I do with everything.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by willthrill81 »

giddyup969 wrote: Mon Jul 25, 2022 1:56 pm
8foot7 wrote: Mon Jul 25, 2022 1:52 pm Third Federal sent us a book of checks that clear directly as draws on the line. Used one this week. I don’t know if we’re getting a card or not, but I can’t imagine personally a scenario when we’d prefer to use a card that draws on the HELOC where we wouldn’t prefer to use a rewards card instead and then pay it off from a HeLOC draw.
How do you pay it back once drawn? Does third federal have an online portal or do we have to send them checks ?
I use the online portal. It's pretty simple.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by willthrill81 »

LittleMaggieMae wrote: Mon Jul 25, 2022 1:57 pm
FWIW: I consider my HELOC as something I could use in an emergency. It's the best way I can have a check for up to 25K (current HELOC) in an envelop in a suitcase by midnight tonight. Not that that has ever happened....
I too would expect to be able to use our HELOC in an emergency. Most of those who have lost their HELOC did so because their equity evaporated (e.g., during the GFC). But a $200k HELOC on a free-and-clear $400k home is pretty secure.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by topper1296 »

bornto2 wrote: Mon Jul 25, 2022 7:54 am Third Federal Update:
Despite language on their website to the contrary, Third Federal does not offer HELOCs on non-primary residences. This change went into effect April 2022 according to the representative.
Per my post from above, I found this out the hard way with US Bank.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by fareastwarriors »

cchrissyy wrote: Sun Jul 24, 2022 11:07 am Data point for PNC
California primary residence
prime rate minus 0.16%
$0 closing costs
$50 annual fee


Applied May 25
Appraised May 27
....silence... it felt like no progress. there was no phone communication and the only email i got was requesting things i had already provided. their online tracker is junk and frankly i doubted it would ever happen
Final Approval July 18
They inform me of a 0.25% discount for linking a PNC checking account so i opened one
Closed July 22

How big is the line?

I'm looking for HELOC for my place in the Bay. Ideally the line is at least 300k for me.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by cchrissyy »

fareastwarriors wrote: Tue Jul 26, 2022 12:00 am

How big is the line?

I'm looking for HELOC for my place in the Bay. Ideally the line is at least 300k for me.
mine is significantly more than that.

sorry i don't know what LTV they require, since i wasn't coming close to it. i think their lending limit is $1m?
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fareastwarriors
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by fareastwarriors »

cchrissyy wrote: Tue Jul 26, 2022 10:30 am
fareastwarriors wrote: Tue Jul 26, 2022 12:00 am

How big is the line?

I'm looking for HELOC for my place in the Bay. Ideally the line is at least 300k for me.
mine is significantly more than that.

sorry i don't know what LTV they require, since i wasn't coming close to it. i think their lending limit is $1m?
I'm glad you have plenty of equity. :happy Thanks for your response. This is perfect.

I think I only have about 500k of equity to tap. If they can give more, I'll gladly take it though. :D
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by cchrissyy »

Good luck!

On one hand i recommend PNC because it was a decent rate, no cost, low effort, and a successful outcome.

On the other hand i can't recommend them at all due to their slow timeline and poor communication.

It is possible my expectations were off due to comparing them to mortgage applications and refis. Maybe this is typical of helocs, I don't know.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by Wolfpack2463 »

Third Federal
Applied 7/25
Approved 8/2
Closing 8/12
150K
Prime -1.01%

Super easy process so far and don't expect any hiccups at the closing (notary coming to our house)
typ993
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by typ993 »

topper1296 wrote: Sun Jul 24, 2022 12:41 pm My plan was to use a HELOC from my current primary residence that is complete paid for as a down payment on a new primary residence that I would move into and then turn my current paid off place into a rental using a property manager that I would hire. I stated my intentions on the first email to a loan officer at US Bank. US Bank had me go thought the entire process of doing a hard inquiry credit check and uploading documents (I was asking for an amount of ~40% of the property value). Just a couple days ago, US Bank declined my HELOC request because they won't do a HELOC on a residence that will be used as a rental. If this is their policy, why have me go through the process when I stated my intention upfront? I'm pretty turned off with US Bank right now because of this (I'm also turned off that their hard credit inquiry will temporary ding my credit score that is in the 830's). Has anybody else had this happen to them? And does anybody know of a bank where I can do this? I don't have to have a HELOC to purchase a new home, but it would allow some extra flexibility.
We ended up getting a $1M HELOC on our present home from US Bank to finance construction of a new house (HELOC to be paid down with proceeds of house sale). We previously had a $70K HELOC, also with US Bank (established a number of years ago). We ran into some problems with US Bank's "mainstream" process for HELOC applications. After complaining about this, US Bank transferred us over to their wealth management arm, who were much more reasonable to deal with (and could offer much larger lines, the "mainstream" process was limited to $750K, as I recall).

I don't know if this counts as misrepresentation, but it pays to be cagey about what you intend to do with the line. We were upfront with our banker, but the safe bet might be just saying it is for "home improvements."
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by Firemenot »

typ993 wrote: Sat Aug 06, 2022 2:40 pm
topper1296 wrote: Sun Jul 24, 2022 12:41 pm My plan was to use a HELOC from my current primary residence that is complete paid for as a down payment on a new primary residence that I would move into and then turn my current paid off place into a rental using a property manager that I would hire. I stated my intentions on the first email to a loan officer at US Bank. US Bank had me go thought the entire process of doing a hard inquiry credit check and uploading documents (I was asking for an amount of ~40% of the property value). Just a couple days ago, US Bank declined my HELOC request because they won't do a HELOC on a residence that will be used as a rental. If this is their policy, why have me go through the process when I stated my intention upfront? I'm pretty turned off with US Bank right now because of this (I'm also turned off that their hard credit inquiry will temporary ding my credit score that is in the 830's). Has anybody else had this happen to them? And does anybody know of a bank where I can do this? I don't have to have a HELOC to purchase a new home, but it would allow some extra flexibility.
We ended up getting a $1M HELOC on our present home from US Bank to finance construction of a new house (HELOC to be paid down with proceeds of house sale). We previously had a $70K HELOC, also with US Bank (established a number of years ago). We ran into some problems with US Bank's "mainstream" process for HELOC applications. After complaining about this, US Bank transferred us over to their wealth management arm, who were much more reasonable to deal with (and could offer much larger lines, the "mainstream" process was limited to $750K, as I recall).

I don't know if this counts as misrepresentation, but it pays to be cagey about what you intend to do with the line. We were upfront with our banker, but the safe bet might be just saying it is for "home improvements."
What was the rate on a million dollar HELOC?
typ993
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by typ993 »

We're paying prime + 0.2% on the $1M HELOC.
JBTX
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by JBTX »

Any good options for TX? First Republic and Third Federal don’t service our area of TX. Looks like BOA is 6.5-7.0%
jmw
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by jmw »

Is it just me that I'm perplexed why anyone would be interested in a HELOC right now except for those sole reason of bridge debt? (and you can't tell the bank it's for bridge debt lol) 6.5% (prime+1) sounds very bad and it will probably go up another 0.5%-0.75% in a month. 4.5% (prime-1) is bad too. Car loans are often cheaper than 6.5%. The cap rate on an investment would have to be very high to justify 6.5% and rising. Or is the reason to have HELOC is "velocity banking" (?!?!?) or the non-existence of a true emergency fund in cash? Right now I don't see the point of opening a HELOC.
riskcalculated2
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by riskcalculated2 »

jmw wrote: Sat Aug 06, 2022 6:44 pm Is it just me that I'm perplexed why anyone would be interested in a HELOC right now except for those sole reason of bridge debt? (and you can't tell the bank it's for bridge debt lol) 6.5% (prime+1) sounds very bad and it will probably go up another 0.5%-0.75% in a month. 4.5% (prime-1) is bad too. Car loans are often cheaper than 6.5%. The cap rate on an investment would have to be very high to justify 6.5% and rising. Or is the reason to have HELOC is "velocity banking" (?!?!?) or the non-existence of a true emergency fund in cash? Right now I don't see the point of opening a HELOC.
One thing to maybe think about is the weighted rate across the 1st and 2nd lien. If you have a $700K 1st mortgage at 2.75% for 30 years and then you do a HELOC for $100-200K for 20 years or so, the blended overall cost of debt would still be relatively low?
Firemenot
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by Firemenot »

riskcalculated2 wrote: Tue Aug 09, 2022 11:22 am
jmw wrote: Sat Aug 06, 2022 6:44 pm Is it just me that I'm perplexed why anyone would be interested in a HELOC right now except for those sole reason of bridge debt? (and you can't tell the bank it's for bridge debt lol) 6.5% (prime+1) sounds very bad and it will probably go up another 0.5%-0.75% in a month. 4.5% (prime-1) is bad too. Car loans are often cheaper than 6.5%. The cap rate on an investment would have to be very high to justify 6.5% and rising. Or is the reason to have HELOC is "velocity banking" (?!?!?) or the non-existence of a true emergency fund in cash? Right now I don't see the point of opening a HELOC.
One thing to maybe think about is the weighted rate across the 1st and 2nd lien. If you have a $700K 1st mortgage at 2.75% for 30 years and then you do a HELOC for $100-200K for 20 years or so, the blended overall cost of debt would still be relatively low?
I’m in the boat of considering a sizable HELOC to build a backyard house. My primary mortgage (660k) is at 2.6 percent on a 30 year. I’d be gambling that rates come down in the next couple of years (eg due to fed easing to get economic growth going again) and/or paying down to make payment more reasonable if rates go up a couple points more from here.

I just can’t stomach giving up the 2.6 percent rate basically and would rather gamble.
Count of Notre Dame
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by Count of Notre Dame »

jmw wrote: Sat Aug 06, 2022 6:44 pm Is it just me that I'm perplexed why anyone would be interested in a HELOC right now except for those sole reason of bridge debt? (and you can't tell the bank it's for bridge debt lol) 6.5% (prime+1) sounds very bad and it will probably go up another 0.5%-0.75% in a month. 4.5% (prime-1) is bad too. Car loans are often cheaper than 6.5%. The cap rate on an investment would have to be very high to justify 6.5% and rising. Or is the reason to have HELOC is "velocity banking" (?!?!?) or the non-existence of a true emergency fund in cash? Right now I don't see the point of opening a HELOC.
I took one out as an emergency fund.
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imak
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by imak »

JBTX wrote: Sat Aug 06, 2022 5:57 pm Any good options for TX? First Republic and Third Federal don’t service our area of TX. Looks like BOA is 6.5-7.0%
In Texas, RBFCU is advertising home equity loan / HELOC rates around 3.75% to 5%. Probably worth exploring.
https://www.rbfcu.org/home-loans-realty ... uity-loans
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JBTX
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by JBTX »

imak wrote: Wed Aug 10, 2022 2:56 pm
JBTX wrote: Sat Aug 06, 2022 5:57 pm Any good options for TX? First Republic and Third Federal don’t service our area of TX. Looks like BOA is 6.5-7.0%
In Texas, RBFCU is advertising home equity loan / HELOC rates around 3.75% to 5%. Probably worth exploring.
https://www.rbfcu.org/home-loans-realty ... uity-loans
Thanks. I’ll check them out.

Looks like HELOCS start around 5.0%. The 3.75 is a 4 year primary home equity loan.
arf30
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by arf30 »

I've got a 300k HELOC (295k outstanding, 5k credit) that's gone up to 4.1%, I'm guessing by reading this thread it's not a great time to refi given the rate increases.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by Prov227 »

For those who have used Third Federal, is it correct that their HELOCs are NOT interest-only arrangements? Per the following "Product Highlights" I saw when starting the application process...
Home Equity Line of Credit - Max Loan $200,000
Term: 10-year draw period with a 30-year total repayment period

A home equity line of credit is a revolving line of credit that offers flexibility to access available funds for a set term.
...
With a Third Federal Home Equity Line of Credit, you begin paying back the principal right from the start. This enables you to build equity faster and gives you a consistent monthly payment throughout the life of your loan. The best part is that there are no large payment increases at the end of the draw period.
We intended to take advantage of interest-only payments. Is there an easy way we can assess the impact of being required to include principal in payments vs interest-only payments?

We have a particular project where we planned to draw from the HELOC in intervals like $20K up front, another $20K in six months, etc. To estimate payments for those draws, would I run amortization for $20K over 30 years and treat that as the initial payment amount, then run another amortization for the next $20K over 29.5 years and add that payment amount to the initial payment amount for a new total payment amount, and so on?
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CardinalRule
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by CardinalRule »

LittleMaggieMae wrote: Sun Jul 24, 2022 1:35 pm One final ADD: Chase, Wells Fargo, and my local Savings and Loan are not offering HELOCs at this time.
The 10-year draw period on our Wells Fargo HELOC ended this month, with no balance on it, and I was a little surprised to learn that Wells is no longer offering this product.

We have paid off the mortgages on both of our two homes, and we rarely drew upon the Wells Fargo HELOC. While we have no immediate need to borrow, DW and I liked the idea of having the HELOC there, just in case. Our credit union, Boeing Employees, is offering a HELOC that looks attractive (no origination costs, etc.) and we are seriously considering it. The Wells Fargo representative did say that we would have to pay a fee to have the lien from the Wells Fargo HELOC lifted, but otherwise we are done with that HELOC.
Sales6280
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by Sales6280 »

What is the best HELOC rate these days. I have Prime -0.61 at TD Bank from a couple years ago. Anything better out there?
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by irr »

For those of you who used Third Federal, is a referral helpful or should I simply apply online and get the rep assigned?
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by calwatch »

Prov227 wrote: Tue Aug 16, 2022 9:47 pm We intended to take advantage of interest-only payments. Is there an easy way we can assess the impact of being required to include principal in payments vs interest-only payments?

We have a particular project where we planned to draw from the HELOC in intervals like $20K up front, another $20K in six months, etc. To estimate payments for those draws, would I run amortization for $20K over 30 years and treat that as the initial payment amount, then run another amortization for the next $20K over 29.5 years and add that payment amount to the initial payment amount for a new total payment amount, and so on?
That is as good a method as any, since it will account for the portion of the $20,000 paid up in the six months in the interim.

Note that, for those with Third Federal HELOCs (or loans in general), you can only pay off $15,000 every 28 days on their web site, You can push payments from a bank over that amount, of course, but this may be important to you.
Chiron
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by Chiron »

I'm in Texas and decided to go with BOA in early May based on their rate, the fact that they do a desktop appraisal and my banking relationship with them. I was getting 2.125% in discounts which still brought it down to only prime +.035% and a six month teaser rate of 3.99. $440k line. The loan is still not closed and the process is an absolute nightmare. Terrible communication and competence from the processing team. It is now allegedly going to close next week (17 weeks after application) but I'm still skeptical. I'm already looking around at alternatives following the end of the teaser rate since the regular rate isn't that good and I hate dealing with them now. May also move my banking. Buyer beware with them.

I've had a HELOC with RBFCU and they are very easy to deal with.
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Re: Official HELOC (Home Equity Line of Credit) thread

Post by nyone »

I was recently denied for a 200K HELOC from 3rd Federal. Unfortunately I didn’t apply until already retired (along with DH) so our income is only his pension ($70K). We have $20K remaining on our mortgage (2.5%) and the house is worth > $1.2MM. We have >2MM in tax deferred retirement assets of which $400K in a 457 that we can draw from now. The rest is in my 401K/403b which I have to wait a year until I’m 59 1/2. We also have $200K taxable.

If I try again, I will wait until 59 1/2 and list our assets as income instead of assets. The mortgage will also be paid off by then.

Is there anything else I should do to be more approvable? Do I need to turn one of my retirement accounts into an annuity or can I just say that it is considered income (with 3rd Federal application)? I have a 3rd Federal loyalty rewards access.

Thanks!
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