HELOC - at primary bank or elsewhere?

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Topic Author
62nc
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HELOC - at primary bank or elsewhere?

Post by 62nc » Wed Mar 18, 2020 10:55 am

Was looking at opening a HELOC for an extra extra backup in these strange times or in case job gets iffy with everything going on. Home is ~$350K and remaining mortgage is ~$56K, so lots of equity there, even if they reduce the line later.

Are there strategies to think about in terms of where to open the HELOC? It is easiest and quickest to open at my primary bank because I get a nice rate and easy application, no cost/fees, etc. But would my primary bank monitor my direct deposits and if they stop, would they infer unemployment and kill the HELOC?

I have other emergency funds that will be first in line, so this question isn't about "are HELOCs bad" or "you shouldn't do this". It is about best place to open HELOC and how banks behave around line reductions, freezes, and so on.

Silk McCue
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Re: HELOC - at primary bank or elsewhere?

Post by Silk McCue » Wed Mar 18, 2020 11:15 am

My wife joins me in retirement at the end of this year. For various good reasons in preparation for that we opened a HELOC with ThirdFederal.com last spring. They have the lowest APR HELOC in the nation. 1.01 percent below Prime. They just lowered the rate on the HELOC to 2.24% yesterday. We only paid the county recording fee of around $800 on a $150k line. No fee for the first year and $65 per year after that. After opening the line you MIGHT want to pay off your mortgage with a portion of the HELOC and continue to pay your regular monthly mortgage payment amount.

We were very proactive in quickly supplying the required documents and closed within a few weeks with a Mobile Notary.

You will need to see if they are available in your state.

Cheers

Topic Author
62nc
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Re: HELOC - at primary bank or elsewhere?

Post by 62nc » Wed Mar 18, 2020 2:51 pm

Silk McCue wrote:
Wed Mar 18, 2020 11:15 am
My wife joins me in retirement at the end of this year. For various good reasons in preparation for that we opened a HELOC with ThirdFederal.com last spring. They have the lowest APR HELOC in the nation. 1.01 percent below Prime. They just lowered the rate on the HELOC to 2.24% yesterday. We only paid the county recording fee of around $800 on a $150k line. No fee for the first year and $65 per year after that. After opening the line you MIGHT want to pay off your mortgage with a portion of the HELOC and continue to pay your regular monthly mortgage payment amount.

We were very proactive in quickly supplying the required documents and closed within a few weeks with a Mobile Notary.

You will need to see if they are available in your state.

Cheers
Well - my question was less to do with where to get a good heloc and more about - is it a bad idea to use my primary bank? Will they close my heloc if they sense that I am under/unemployed and how do they detect that?

But as to your thirdfederal suggestion - at my bank they are offering 1.74% first 12 months, then 3.61% (both are variable). 10 year draw, 20 year repay. No fees, closing, and no annual fee.

Question - why would I pay the primary mortgage off with the HELOC? My primary btw is 3.25% 20 yr term but I'm nearing the end, so very little interest is going to the primary right now.
Last edited by 62nc on Wed Mar 18, 2020 4:11 pm, edited 1 time in total.

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8foot7
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Re: HELOC - at primary bank or elsewhere?

Post by 8foot7 » Wed Mar 18, 2020 3:03 pm

62nc wrote:
Wed Mar 18, 2020 2:51 pm

Well - my question was less to do with where to get a good heloc and more about - is it a bad idea to use my primary bank? Will they close my heloc if they sense that I am under/unemployed and how do they detect that?

I don't know if it's a bad idea, but yes, your bank could close your HELOC if they believe your employment or financial situation is adversely affected by events or has materially changed since the time of your application. As for detecting it, not hard to build a model that looks at your recent deposits as one input, your credit score over time as another, your balance and payments as reported on your credit report, shifting spending patterns (i.e. payments of thousands to Chase aroudn the same time every month for years and then payments to Chase of amounts that look like minimum payments) which may look like you are running up debt, etc.

Obviously payments from unemployment agency would be a pretty big red flag and I would be very surprised if the appearance of these deposits in bank accounts did not at the very least get flagged for further review by some process, automated or manual, at all but the smallest financial institutions.

Or, more manually, you probably granted permission to them to continue to verify your employment in your loan docs. They could ask you for your current employer and if you declined to respond or they could not verify your information, that would also be an input.
Last edited by 8foot7 on Wed Mar 18, 2020 3:06 pm, edited 2 times in total.

Silk McCue
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Re: HELOC - at primary bank or elsewhere?

Post by Silk McCue » Wed Mar 18, 2020 3:04 pm

62nc wrote:
Wed Mar 18, 2020 2:51 pm
Silk McCue wrote:
Wed Mar 18, 2020 11:15 am
My wife joins me in retirement at the end of this year. For various good reasons in preparation for that we opened a HELOC with ThirdFederal.com last spring. They have the lowest APR HELOC in the nation. 1.01 percent below Prime. They just lowered the rate on the HELOC to 2.24% yesterday. We only paid the county recording fee of around $800 on a $150k line. No fee for the first year and $65 per year after that. After opening the line you MIGHT want to pay off your mortgage with a portion of the HELOC and continue to pay your regular monthly mortgage payment amount.

We were very proactive in quickly supplying the required documents and closed within a few weeks with a Mobile Notary.

You will need to see if they are available in your state.

Cheers
Well - my question was less to do with where to get a good heloc and more about - is it a bad idea to use my primary bank? Will they close my heloc if they sense that I am under/unemployed and how do they detect that?

But as to your thirdfederal suggestion - at my bank they are offering 1.74% first 12 months, then 3.61% (both are variable). 10 month draw, 20 month repay. No fees, closing, and no annual fee.

Question - why would I pay the primary mortgage off with the HELOC? My primary btw is 3.25% 20 yr term but I'm nearing the end, so very little interest is going to the primary right now.
1) If you don't tell them you are unemployed they won't know.
2) Your bank's HELOC would be inferior for my purposes but could be superior for yours. You referenced months but meant years on the draw and repay. Third Federal also does 10 year draw followed by 20 year repay.
3) My suggestion on paying off the mortgage was just shooting from the hip. You had not provided your interest rate.

Cheers

michaeljc70
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Re: HELOC - at primary bank or elsewhere?

Post by michaeljc70 » Wed Mar 18, 2020 3:24 pm

Chances are good your bank doesn't have the best rate/terms. I see no advantage to using them (unless the rate/terms are great) as most don't even make it much easier to apply for existing customers.

I highly doubt they are going to call your HELOC because you stop getting direct deposits. That could happen for many reasons (like using a different bank) and I highly doubt they monitor that as it wouldn't be particularly useful information.

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8foot7
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Re: HELOC - at primary bank or elsewhere?

Post by 8foot7 » Wed Mar 18, 2020 3:27 pm

michaeljc70 wrote:
Wed Mar 18, 2020 3:24 pm


I highly doubt they are going to call your HELOC because you stop getting direct deposits. That could happen for many reasons (like using a different bank) and I highly doubt they monitor that as it wouldn't be particularly useful information.
I agree that that would not be the sole reason. It could be a very interesting data point among a series of other data points. I disagree about them monitoring it, because it is useful information for a variety of constituents, such as marketing, investments etc. Almost everything is monitored in a bank of much size.
Last edited by 8foot7 on Wed Mar 18, 2020 3:29 pm, edited 1 time in total.

michaeljc70
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Re: HELOC - at primary bank or elsewhere?

Post by michaeljc70 » Wed Mar 18, 2020 3:28 pm

8foot7 wrote:
Wed Mar 18, 2020 3:27 pm
michaeljc70 wrote:
Wed Mar 18, 2020 3:24 pm


I highly doubt they are going to call your HELOC because you stop getting direct deposits. That could happen for many reasons (like using a different bank) and I highly doubt they monitor that as it wouldn't be particularly useful information.
If you'll read what I wrote, I said it was one of many inputs into a model. I agree that that would not be the sole reason. It could be a very interesting data point among a series of other data points. I disagree about them monitoring it, because it is useful information for a variety of constituents, such as marketing, investments etc. Almost everything is monitored and monitored in a bank of much size.
Why do I need to do that? I didn't respond to you! :oops:

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8foot7
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Re: HELOC - at primary bank or elsewhere?

Post by 8foot7 » Wed Mar 18, 2020 3:30 pm

michaeljc70 wrote:
Wed Mar 18, 2020 3:28 pm
8foot7 wrote:
Wed Mar 18, 2020 3:27 pm
michaeljc70 wrote:
Wed Mar 18, 2020 3:24 pm


I highly doubt they are going to call your HELOC because you stop getting direct deposits. That could happen for many reasons (like using a different bank) and I highly doubt they monitor that as it wouldn't be particularly useful information.
If you'll read what I wrote, I said it was one of many inputs into a model. I agree that that would not be the sole reason. It could be a very interesting data point among a series of other data points. I disagree about them monitoring it, because it is useful information for a variety of constituents, such as marketing, investments etc. Almost everything is monitored and monitored in a bank of much size.
Why do I need to do that? I didn't respond to you! :oops:
I apologize. You are right.

michaeljc70
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Re: HELOC - at primary bank or elsewhere?

Post by michaeljc70 » Wed Mar 18, 2020 3:36 pm

8foot7 wrote:
Wed Mar 18, 2020 3:30 pm
michaeljc70 wrote:
Wed Mar 18, 2020 3:28 pm
8foot7 wrote:
Wed Mar 18, 2020 3:27 pm
michaeljc70 wrote:
Wed Mar 18, 2020 3:24 pm


I highly doubt they are going to call your HELOC because you stop getting direct deposits. That could happen for many reasons (like using a different bank) and I highly doubt they monitor that as it wouldn't be particularly useful information.
If you'll read what I wrote, I said it was one of many inputs into a model. I agree that that would not be the sole reason. It could be a very interesting data point among a series of other data points. I disagree about them monitoring it, because it is useful information for a variety of constituents, such as marketing, investments etc. Almost everything is monitored and monitored in a bank of much size.
Why do I need to do that? I didn't respond to you! :oops:
I apologize. You are right.
No problem. We are in the midst of a pandemic :D Though I usually try to read or at least skim other responses I hadn't even read your response.

Topic Author
62nc
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Re: HELOC - at primary bank or elsewhere?

Post by 62nc » Wed Mar 18, 2020 4:10 pm

Silk McCue wrote:
Wed Mar 18, 2020 3:04 pm
2) Your bank's HELOC would be inferior for my purposes but could be superior for yours. You referenced months but meant years on the draw and repay. Third Federal also does 10 year draw followed by 20 year repay.
3) My suggestion on paying off the mortgage was just shooting from the hip. You had not provided your interest rate.
2) Cool, I'll change that typo
3) Gotcha

mikep
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Re: HELOC - at primary bank or elsewhere?

Post by mikep » Wed Mar 18, 2020 5:23 pm

62nc wrote:
Wed Mar 18, 2020 4:10 pm
Silk McCue wrote:
Wed Mar 18, 2020 3:04 pm
2) Your bank's HELOC would be inferior for my purposes but could be superior for yours. You referenced months but meant years on the draw and repay. Third Federal also does 10 year draw followed by 20 year repay.
3) My suggestion on paying off the mortgage was just shooting from the hip. You had not provided your interest rate.
2) Cool, I'll change that typo
3) Gotcha
Does third federal have a problem if your house is titled in your trust?

Silk McCue
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Re: HELOC - at primary bank or elsewhere?

Post by Silk McCue » Wed Mar 18, 2020 5:24 pm

mikep wrote:
Wed Mar 18, 2020 5:23 pm
...

Does third federal have a problem if your house is titled in your trust?
I don’t know. I would just give them a call and ask.

Cheers

mikep
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Re: HELOC - at primary bank or elsewhere?

Post by mikep » Thu Mar 19, 2020 8:55 am

Silk McCue wrote:
Wed Mar 18, 2020 5:24 pm
mikep wrote:
Wed Mar 18, 2020 5:23 pm
...

Does third federal have a problem if your house is titled in your trust?
I don’t know. I would just give them a call and ask.

Cheers
I called. Third Federal will NOT close a HELOC with the property in the name of the trust. Not even as part of the process will they update the deed for you, they just told me they couldn't do it at all. I will skip the hassle and find another bank/CU. Who has the 2nd best rate?

CT-Scott
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Re: HELOC - at primary bank or elsewhere?

Post by CT-Scott » Thu Mar 19, 2020 4:07 pm

I don't want to hijack this thread, but I started up a similar one, so I'm just posting an "ad" for it here to ask some of you to take a look and help me out:
viewtopic.php?f=2&t=308501&p=5113075#p5113075

Silk McCue
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Re: HELOC - at primary bank or elsewhere?

Post by Silk McCue » Thu Mar 19, 2020 7:24 pm

CT-Scott wrote:
Thu Mar 19, 2020 4:07 pm
I don't want to hijack this thread, but I started up a similar one, so I'm just posting an "ad" for it here to ask some of you to take a look and help me out:
viewtopic.php?f=2&t=308501&p=5113075#p5113075
Sorry your linked post is very long long and full of distracting details. I will provide this. I never saw the appraiser and they never contacted me. The appraiser took pictures at various angles from the street. I expect they used County records and comps for the rest.

Cheers

CT-Scott
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Re: HELOC - at primary bank or elsewhere?

Post by CT-Scott » Fri Mar 20, 2020 7:32 am

Silk McCue wrote:
Thu Mar 19, 2020 7:24 pm
CT-Scott wrote:
Thu Mar 19, 2020 4:07 pm
I don't want to hijack this thread, but I started up a similar one, so I'm just posting an "ad" for it here to ask some of you to take a look and help me out:
viewtopic.php?f=2&t=308501&p=5113075#p5113075
Sorry your linked post is very long long and full of distracting details. I will provide this. I never saw the appraiser and they never contacted me. The appraiser took pictures at various angles from the street. I expect they used County records and comps for the rest.
Thanks for the info about the appraisal. Also, based on your feedback about my post, I just edited it to make the questions shorter and more to the point, and moved some of the added background/details to the end of my post.

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Watty
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Re: HELOC - at primary bank or elsewhere?

Post by Watty » Fri Mar 20, 2020 7:41 am

I make a point of never having any loans or credit cards at a place where I have any accounts.

The problem is that they have a "right of offset"(Google this) where if there is a dispute they can take the money from your account to pay your debt.

There was a post recently where someone had run into this.

viewtopic.php?t=302700

CT-Scott
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Re: HELOC - at primary bank or elsewhere?

Post by CT-Scott » Fri Mar 20, 2020 8:10 am

Watty wrote:
Fri Mar 20, 2020 7:41 am
I make a point of never having any loans or credit cards at a place where I have any accounts.
Absolutely! There are too many online banking options nowadays where it's super-easy to sign up for a new account, transfer money in/out, etc. Diversify and keep your "debt" accounts separate from your savings/checking accounts.

mikep
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Re: HELOC - at primary bank or elsewhere?

Post by mikep » Fri Mar 20, 2020 10:47 am

Looks like third federal increased their rates today from 2.24 to 3.19%, yet they still advertise "prime - 1.01%"...

I guess prime -1.01% is no longer and they changed it to prime - 0.06%.

I was just preparing the deed to take my house out of the trust now also..online application center not available..too good to be true.. guess I won't bother with them.

CT-Scott
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Re: HELOC - at primary bank or elsewhere?

Post by CT-Scott » Fri Mar 20, 2020 11:04 am

mikep wrote:
Fri Mar 20, 2020 10:47 am
Looks like third federal increased their rates today from 2.24 to 3.19%, yet they still advertise "prime - 1.01%"...

I guess prime -1.01% is no longer and they changed it to prime - 0.06%.

I was just preparing the deed to take my house out of the trust now also..online application center not available..too good to be true.. guess I won't bother with them.
NO!!! I was hoping to kick off my application today. :( That said, I expect the prime rate to stay low for a while (if anyone disagrees, please comment). Perhaps this is more of a temporary change on their part to slow down a currently overloaded application backlog?

Silk McCue
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Re: HELOC - at primary bank or elsewhere?

Post by Silk McCue » Fri Mar 20, 2020 11:54 am

CT-Scott wrote:
Fri Mar 20, 2020 11:04 am
mikep wrote:
Fri Mar 20, 2020 10:47 am
Looks like third federal increased their rates today from 2.24 to 3.19%, yet they still advertise "prime - 1.01%"...

I guess prime -1.01% is no longer and they changed it to prime - 0.06%.

I was just preparing the deed to take my house out of the trust now also..online application center not available..too good to be true.. guess I won't bother with them.
NO!!! I was hoping to kick off my application today. :( That said, I expect the prime rate to stay low for a while (if anyone disagrees, please comment). Perhaps this is more of a temporary change on their part to slow down a currently overloaded application backlog?
I see the 3.19% listed on their site and the verbiage still says Prime - 1.01%. However when I log into my HELOC and look at my details it shows the rate of 2.24%. I'll check again tomorrow and then next week.

Cheers

mikep
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Re: HELOC - at primary bank or elsewhere?

Post by mikep » Fri Mar 20, 2020 1:12 pm

Silk McCue wrote:
Fri Mar 20, 2020 11:54 am
CT-Scott wrote:
Fri Mar 20, 2020 11:04 am
mikep wrote:
Fri Mar 20, 2020 10:47 am
Looks like third federal increased their rates today from 2.24 to 3.19%, yet they still advertise "prime - 1.01%"...

I guess prime -1.01% is no longer and they changed it to prime - 0.06%.

I was just preparing the deed to take my house out of the trust now also..online application center not available..too good to be true.. guess I won't bother with them.
NO!!! I was hoping to kick off my application today. :( That said, I expect the prime rate to stay low for a while (if anyone disagrees, please comment). Perhaps this is more of a temporary change on their part to slow down a currently overloaded application backlog?
I see the 3.19% listed on their site and the verbiage still says Prime - 1.01%. However when I log into my HELOC and look at my details it shows the rate of 2.24%. I'll check again tomorrow and then next week.

Cheers
Sure, if you already have one, they probably can't change the terms. They could certainly change it for new sign ups however.

Silk McCue
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Re: HELOC - at primary bank or elsewhere?

Post by Silk McCue » Fri Mar 20, 2020 5:41 pm

mikep wrote:
Fri Mar 20, 2020 1:12 pm

Sure, if you already have one, they probably can't change the terms. They could certainly change it for new sign ups however.
As of my prior post the website still said Prime -1.01%.

The online Application Center for all loan types has now been shut down at ThirdFederal. On a Heloc page the verbiage now reads Prime -.06%.

I would say that the current state of affairs has shaken them. They want to mitigate future risk.

Cheers

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