recommendations for HELOC? does it matter to pick the cheapest rate?

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bling
Posts: 265
Joined: Sat Jan 21, 2012 12:49 pm

recommendations for HELOC? does it matter to pick the cheapest rate?

Post by bling » Wed Jun 13, 2018 6:20 pm

i'm interested in getting a HELOC and i've been shopping around and here's the shortlist so far:

third federal
penfed
bank of america
alliant

all of the above have no closing fees nor have yearly fees. i have a banking relationship with BoA, but even with all possible discounts, the rate is greater than the others.

i don't plan on using the HELOC unless it's an extreme emergency, or if a major house repair/renovation comes up where i don't want to sell from my taxable accounts.

so, the question i guess is what should i look for in a lender? sure, i can go with the lowest rate, but surely size of the bank matters too right? i believe a bunch of people had their HELOCs frozen during 2008. also, since rates are variable, do they fluctuate enough that i should worry about it, or should i still pick the lowest rates since they will likely continue to be lower in the future?

thanks.
Last edited by bling on Thu Jun 14, 2018 7:35 pm, edited 2 times in total.

tmcc
Posts: 130
Joined: Tue Feb 06, 2018 6:38 pm

Re: recommendations for HELOC? does it matter to pick the cheapest rate?

Post by tmcc » Wed Jun 13, 2018 6:29 pm

whether interest, closing fees or maintenance fees, you'll probably pay no matter what.

delamer
Posts: 5469
Joined: Tue Feb 08, 2011 6:13 pm

Re: recommendations for HELOC? does it matter to pick the cheapest rate?

Post by delamer » Wed Jun 13, 2018 7:26 pm

I am not aware of any correlation between bank size and whether a HELOC was frozen in 2008, if that is your concern.

HELOC’s were frozen or reduced because the value of the underlying properties went down.

You should look at each bank’s for formula for determining future rates. One bank might have a very low introductory rate for 6 months, but the reset formula could yield a higher rate over the long run.

Spirit Rider
Posts: 8338
Joined: Fri Mar 02, 2007 2:39 pm

Re: recommendations for HELOC? does it matter to pick the cheapest rate?

Post by Spirit Rider » Wed Jun 13, 2018 8:45 pm

Make sure you are comparing Apples to Apples when comparing rates. This will be the current benchmark rate (Prime, LIBOR, etc...) + the margin. There maybe temporary rates for the first six months/1 year, that it not what matters unless you are planning to pay it off quickly.

Also, be aware that the FED raised rates by 0.25% today, plan to do two more later in the year and likely four more in 2019.

BoA was one of the quickest to freeze HELOCs. They did it starting in 2007.

stevew7
Posts: 43
Joined: Fri Jan 09, 2009 10:40 am

Re: recommendations for HELOC? does it matter to pick the cheapest rate?

Post by stevew7 » Thu Jun 14, 2018 7:05 am

bling wrote:
Wed Jun 13, 2018 6:20 pm
all of the above have no closing fees nor have yearly fees. i have a banking relationship with BoA, but even with all possible discounts, the rate is greater than the others.
Double check that there are no annual fees. An annual fee is more common now than in the past. For example:

Alliant Credit Union:
http://www.alliantcreditunion.org/borro ... n#features
"There is a $50 annual fee that will be waived for the first year."

Third Federal
https://www.thirdfederal.com/disclosure ... ty-product
"1Annual fee is $65, waived the first year."

Also be careful when a lender advertises "no closing costs" as sometimes they exclude certain fees from this. For example, PenFed excludes notary fees and the appraisal if required, which could easily be several hundred dollars:

https://www.penfed.org/home-equity-cent ... -of-credit
"If an appraisal is required, the cost will be paid by the member, who is responsible for the fee whether or not the loan closes. The member is responsible for notary fees. "

Good luck!

4th and Inches
Posts: 159
Joined: Mon Nov 12, 2012 8:53 pm

Re: recommendations for HELOC? does it matter to pick the cheapest rate?

Post by 4th and Inches » Thu Jun 14, 2018 7:49 am

Spirit Rider wrote:
Wed Jun 13, 2018 8:45 pm

Also, be aware that the FED raised rates by 0.25% today, plan to do two more later in the year and likely four more in 2019.

Is that what the FED said? Two more increases this year and four next year?

GodelianKnot
Posts: 65
Joined: Tue Mar 11, 2014 11:32 am

Re: recommendations for HELOC? does it matter to pick the cheapest rate?

Post by GodelianKnot » Thu Jun 14, 2018 8:00 am

4th and Inches wrote:
Thu Jun 14, 2018 7:49 am
Spirit Rider wrote:
Wed Jun 13, 2018 8:45 pm

Also, be aware that the FED raised rates by 0.25% today, plan to do two more later in the year and likely four more in 2019.

Is that what the FED said? Two more increases this year and four next year?
Not quite. Their median prediction is 2 more this year, 3 in 2019, and 1 in 2020.

bling
Posts: 265
Joined: Sat Jan 21, 2012 12:49 pm

Re: recommendations for HELOC? does it matter to pick the cheapest rate?

Post by bling » Thu Jun 14, 2018 7:37 pm

stevew7 wrote:
Thu Jun 14, 2018 7:05 am
bling wrote:
Wed Jun 13, 2018 6:20 pm
all of the above have no closing fees nor have yearly fees. i have a banking relationship with BoA, but even with all possible discounts, the rate is greater than the others.
Double check that there are no annual fees. An annual fee is more common now than in the past. For example:

Alliant Credit Union:
http://www.alliantcreditunion.org/borro ... n#features
"There is a $50 annual fee that will be waived for the first year."

Third Federal
https://www.thirdfederal.com/disclosure ... ty-product
"1Annual fee is $65, waived the first year."

Also be careful when a lender advertises "no closing costs" as sometimes they exclude certain fees from this. For example, PenFed excludes notary fees and the appraisal if required, which could easily be several hundred dollars:

https://www.penfed.org/home-equity-cent ... -of-credit
"If an appraisal is required, the cost will be paid by the member, who is responsible for the fee whether or not the loan closes. The member is responsible for notary fees. "

Good luck!
thanks, it's definitely worth noting the super fine print. i double-checked your double-check, and the fees mentioned are only for home equity loans, which are similar but different from home equity line of credits.

nonetheless, in my brief searching pretty much everyone provides very limited information aside from a number to call, which screams sales tactics that i'm not looking forward to.

GuyInFL
Posts: 97
Joined: Thu Aug 04, 2016 7:17 pm

Re: recommendations for HELOC? does it matter to pick the cheapest rate?

Post by GuyInFL » Thu Jun 14, 2018 7:55 pm

Ive used PenFed and been happy.

Bogle_Bro
Posts: 73
Joined: Sat Mar 31, 2018 11:43 am
Location: Frisco Texas, Mortgage Banker & Attorney

Re: recommendations for HELOC? does it matter to pick the cheapest rate?

Post by Bogle_Bro » Thu Jun 14, 2018 8:51 pm

depends on a lot of factors.

sweet spot for BoA heloc with 100k+ draw & line is like half a point below wsj prime...

1st year promo is a point and a quarter below wsj prime

alerya
Posts: 17
Joined: Thu Apr 27, 2017 7:07 pm

Re: recommendations for HELOC? does it matter to pick the cheapest rate?

Post by alerya » Thu Jun 14, 2018 8:52 pm

I recently opened a HELOC with DIgital Federal Credit Union. Specifically, I was looking for a HELOC with no minimum draw and zero costs (no closing costs or annual fee). We closed last month and there were no surprises. If you do draw on the HELOC for a large purchase, they also allow you to lock in a fixed rate which is a great feature. The rate is prime minus .25 I believe.

tev9876
Posts: 101
Joined: Thu Sep 14, 2017 9:12 am

Re: recommendations for HELOC? does it matter to pick the cheapest rate?

Post by tev9876 » Fri Jun 15, 2018 8:34 am

I went with PenFed since I already had accounts there (car loan, credit card) and they were the best rate (prime + 0%) with no fees. I could have gotten prime-.5% or so, but those came with hoops to jump through like automatic withdrawal from checking or annual fees. PenFed was exactly two weeks from online application to funds being available. Only fee I had to pay was $30 to the UPS Store for three notarized signatures. Checks were sent for free. If I close within two years I do have to pay closing costs of $120 or so - basically the appraisal fee.

A week later I got a pre-approved offer from Key Bank for Prime-.74%. :oops: I didn't see any fees or hoops in that one, but didn't dig into the details as I was already closed with PenFed.

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