HELOC - US Bank or...(now probably refi first)

[Anonymous]

ETA: First post on page 3 has update...switching to refi. 

We're in Southern California. My banking relationship is with a local CU with a hard rule of no HELOC with FICO below 720 (which I assume is mortgage fico, but at the time I talked to them, I didn't know enough to ask.) 

I've seen US Bank advertise and they're running their low interest intro promo now. I stopped at the US Bank and asked a gal a few questions and she was nice enough, but not super knowledgeable. There seemed to be someone more knowledgeable, but they were tied up with someone else. 

When I ran a 3-bureau report, our mortgage ficos were in the 650-700 range. I've since found this community and have actively been working on our credit, so it's likely a bit higher now. 

I'd love to find someone to go 90% LTV, even if it cost me a bit more. Even though the US bank website goes to 90% in it's estimates, the gal at the branch said 80 and when I searched on bankrate, US Bank dropped out when I changed the search to High LTV, so I doubt it. 

I tried searching on HELOC and US Bank here and not a lot seemed to apply. 

Thoughts? Suggestions? Other places to try?

Both the gal at the branch and a recent chat mentioned that they consider 'current banking relationship' with them as well. Do I open an account just to establish a relationship in case I choose to do this down the line? I wouldn't mind a Cash+ CC, but I'd think I shouldn't appy for a CC with this on the horizon. Or just park a bit in some other account? 

[KatieKatie]

Hi, I don't have anything to add on US Bank, but I would suggest exploring other CUs in your area or perhaps considering NFCU if you're eligible for membership.  NFCU will allow Home Equity Loans up to 100% of LTV and HELOCs up to 95%.  Their rates are based on scores, and it can get quite pricey for a score below 700, but it's' a thought.  I am going through the process right now and I'm using a small regional CU in  FL that will do 95%LTV.  NASA FCU will go to 95% in their area and 90% in other areas they're willing to loan in.  As I mentioned,  I would continue to check around locally with the hope you'll find a good CU who also offers the terms you're looking for.                          

[Anonymous]

Thanks KatieKatie, good to know. There's another CU we're associated with and a few more around here. I'll see about NASA in CA too. 

[Anonymous]

Talked to someone at US Bank. Very knowledgeable and helpful (even though I've never heard 'Well, yes and no...' more on a single call in my life. )

He seemed happy with our scores, said 90% was possible, and didn't run screaming when I mentioned a 'tax thing'. Sounds like it could work. It sounds like it's worth app'ing for it next week while they've still got their promo going. As long as you app by Friday, you get the 5 month low intro rate special. Over the long haul, it won't make much of a difference, but might as well take advantage if I'm going to do it soon. If I have to get more ducks lined up, I still get the promo if I app'd in this period and it takes months to get it set up. I tried to call back and ask a question and probably would have ended up app'ing today if he had picked up or called back. Probably good that I have the weekend to think on it. 

[Anonymous]

We applied yesterday. And since there's not a lot of info on the boards about this, I figure I'll chronicle what I find out here in case it helps someone else down the line. 

I first spoke to the gal at the local supermarket branch. Very nice and enthusiastic, but not the most knowledgeable. Then I spoke to the guy on the phone. He was super helpful and knowledgeble, so I thought I'd like to work with him. However, he gave me his direct line and I left two (three?) voicemails over the course of a few days and didn't hear back. This is AFTER I'd asked him 'You've been so helpful, do you get some kind of credit if I apply thru you?' and he responded he IS a salesman, so yes. Evidentlally, he's not a GOOD salesman :rolleyes:

I dropped in the branch one day this week to ask a couple more questions. Not only was my gal not knowledgeable, on some things neither were the other people there. The question that's sticking in  my mind was 'Do they pull your mortgage credit score or just the regular one?' They kept trying to explain that they wouldn't just look at the history on my mortgage, they'd look at all my credit history. I tried to explain there are multiple fico scores and that while it's fairly new, there ARE different fico scores for different purposes. (I don't think they believed me.) 

I was undeterred and applied on Friday. I called in to the same gal and applied on my lunch break. I figured if I needed anything else I'd be able to drop it by after work. When she asked how much I wanted to apply for, I said as much as I can. We'd talked about 90% before, but I shouldn't have assumed that. We emailed back and forth a bit, me giving her some more information that I could by email, and her asking me for paystubs, w-2's and giving me a document to sign.

She'd previously given me a doc that listed that a w-2 employee generally has to submit paystubs, w-2's and tax returns, and when I took the stuff in she was surprised that UW hadn't asked for the tax returns. I said I've got them ready if they want them. I took it as a good sign that they didn't ask. My second job recently switched me from 1099 to w-2, so I explained I just had one paystub and so I gave the 1099s for the last two years. She thought that was good as well. 

I started asking again about their option to section off a portion of the LOC and turn that portion into an installment loan. At first she was a bit confused, but then she remembered the acronym for it and got what I was asking. When I wanted more specifics on it, she was asking a more experienced co-worker about it and the three of us talked about it. I'm glad to get that woman's name as well. It came up that she hadn't put me down as applying for 90%. She changed that. She thought I was applying yesterday because of the promotion, and I was. The fine print says "A higher introductory rate will apply for an LTV above 90%". I take that to mean there's still a promotion, just not as good, but I would have applied anyway, I'm glad to have had it as a bit of a fire under me. 

They've just pulled EX at this point. It's an inquiry as an installment loan. 

There was quite a bit of 'up in the air' ness about appraisal too. They said it might be a desk appraisal, might be drive by, and might be more. It'll be interesting. I went on the reasonable-but-high side. If they stick with that number, I could stick with 80%, maybe. 

What I wish I could get more info on is, assuming this goes through, how it will report. I've read that HELOCs over some unknown threshold ($40k? $50k) report as an installment loan rather than a revolver. And I'm thinking that the way my inquiry shows up makes that likely in my case (I'm going for upwards of $70k). I've also read that even if it shows as a revolver, the available credit doesn't help your utilization. What I don't know is:

• If it shows as a revolver, does high utilization hurt you?
• If you do the portion part of it off into a fixed rate loan, does the remaining part report as a revolver now that it's less than the magic $40k-ish number? 
• Does it start reporting as two things at that point? (I did confirm that you will get two different bills at that point and can specify to pay more towards either one as desired.)

Some of these answers would help me determine if I took 80% or 90%, but no one has an answer. Very frustrating. They said I'm probably waiting until Tuesday to hear anything.

[KatieKatie]

I commend you for doing this!  There is surprisingly little information on home equity loans or HELOCs on the forum.  I suspect this topic will gain interest in the coming years as home values start to recover.  So hopefully many others will benefit from the value of your effort to chronicle your experiences and what you learn.

I am in the midst of the home equity loan process and while I wish I could answer your specific questions, I doubt that I'll be much help there. I will add some tidbits that I thought were oddities based on my own recent experience.  I opted to apply with two local credit unions, one with a 90% LTV option and a fixed rate of 6.10% before I realized that another one offered a 95% LTV option with a 5.25% interest rate.  Both offered terms up to 20 years at their respective rates.  With the first option the credit score minimum was 640 and the second option required a 700 credit score for 95% LTV.  What surprised me in both cases is that they do not pull all 3 credit bureaus.  I was expecting they would use the middle score, but they both used Equifax (which always is my middle score anyway).  The equifax scores they pulled matched my MyFico ScoreWatch scores, so I don't think they pulled a mortgage version.  In the first case they perform a drive by appraisal, in the second case they provided the borrower with the choice of drive by or full appraisal, but advised me that lately borrowers have been happier with the drive by outcomes.  The other interesting thing was closing times, which varied widely.  With the first CU, I was quoted a closing time of 4-6 weeks, while the second one says 2.5 weeks.  I'm a week away, so I'll let you know if they meet that.  In both cases, closing costs were waived (including appraisal) as long as the loan is not repaid in full before 2 years have elapsed.  The first CU required check stubs for the last 30 days and w2s for the last 2 years, while the second CU required those things plus tax returns for 2013 and 2014 (which I had to promptly complete, because I typically procrastinate until the last possible moment).  DTI limit in both cases was 43%.  I am not taking a loan to consolidate or payoff debt, but the second CU volunteered when I asked about DTI that if the funds were disbursed at closing to payoff a particular loan, they would not factor that loan repayment amount into the DTI.  When I asked if they would factor my bonus into my income, since I changed employers about 30 days ago, they mentioned that with my offer letter, they would average my last 2 years of income from my w2's (i.e. using the presumption that my earnings had been similar in the past).  Fortunately I don't need bonus income to meet the DTI requirements, because my past 2 years were substantially less than my current outlook.

That's all I can think of for now.  If something else develops, I'll keep you posted.

[Anonymous]

Thanks. My initial thought was to fix a big portion of what I take (using it to pay off a couple big expenses). I've been a bit spooked by the thought of rates likely going up this year. Then I realized that the rate on the HELOC vs. fixed (even if you fix a portion) is usually 1.5 to 2% lower than the fixed, and if I get the intro promo, it's even more pronounced. I don't think the rate would shoot up by several points overnight, so I think I'd leave it in the LOC - depending on the answer to how it reports. 

My other couple thoughts have been:

Before I applied I check the pre-qual on a personal loan at SoFi. It's not a great rate, but it's not horrible. I could get enough to take care of a tax issue and a couple odds and ends. That would give me time to re-vamp if this doesn't go through. 

If this DOES go through, I realized I could STILL refinance my first a bit down the road if rates stay low. And that way I could refi the first at a lower LTV, just re-fi the current balance, and not have to do a cash out refi and save a bit. And if rates go up quicker than I think I'm in a good position to do that, then I don't do it. If I were to do a non-cash out refi today, I think I could get shave enough off my rate to save $150-$200 mo. and if I paid to keep the same pay off date, I'd save between $150 and $100. 

Wait, wait, wait. 

[KatieKatie]

Oh yeah!  You brought something else to mind that I forgot about when I decided to do the Home Equity Loan instead of the HELOC.  Not sure how prevalent this is, but in my market at least one CU (can't remember which of the two it was or if it was both) wanted to use an interest rate of 12% for purposes of determining the payment amount that should be used for DTI purposes.  I guess this is to stress test someone's DTI to make sure they could still meet the requirements if rates went up...  I abandoned the HELOC idea because I'm building a pool and will definitely use the full amount so I didn't want to deal with the uncertainty of how it would report, plus I'm a wimp when it comes to variable rates (don't ask me why, it's an irrational fear or maybe just a control thing :-).  I decided that 5 and a quarter would have been a wonderful rate 5 or 6 years ago, so I can deal with it for the next 2 years until I pay this thing off.   

[Anonymous]

Heard from US Bank. Thru financial underwriting. They requested copy of insurance, prop taxes, and first mortgage note. I questioned the last one and he said its to make sure there's no balloon payment. Also, the appraisal and title were ordered and should be done by the 11th.

[Anonymous]

I didn't say in the last post, but I took that stuff in right away. Today I got an envelope in the mail from them asking for the stuff they asked for by phone and email earlier. It's dated 6 days ago asking me to get it to them in the next 5 days so I'm glad they called/emailed too. 

It also included a notice of a relationship between US Bank and two appraisal services. I guess it's just so that if I get a call from them, I know it's legit. Still a waiting game.