topic Re: NFCU HELOC Approval Question in Mortgage Loans

NFCU HELOC Approval Question

nitrov — Mon, 28 Jul 2014 22:37:20 GMT

Hi,

So, I just bought my home in December 2013 and need a HELOC for improvements on the house. My plan is to get the HELOC, do the improvements, and refinance my FHA loan with a conforming/conventional to rid myself of the PMI. My credit has changed dramatically since I got my mortgage.

So, my USAA FAKOs are currently 749/722/739 for EX/EQ/TU, respectively. I have reason to believe my actual EQ FICO is significantly lower, maybe 670, while my EX and TU are both over 720. I just got approved for a NFCU Flagship Signature Visa with a $20k limit, they pulled TU for me (twice). I have no other lending relationship with them currently. This is now my highest CL. I also just got approved for a Chase IHG MC with a $9000 CL (2nd highest CL). Aside from these, I have about $40k of available CLs, util is about 20%, AAoA is about 3.5 years.

My question is, should I wait until the new NFCU and Chase cards hit my credit to app for the HELOC with NFCU in hopes the available credit bump will help my credit OR do I do it before since the new accounts might give me a ding. The inquiries are already on my credit, so I know that ship has sailed.

I was told by an NFCU rep that they pull all 3 CBs for a HELOC. Anybody know if that's true? If so, I'm afraid EQ might mess it up for me.

Any tips, insights, or experiences with them on HELOCS or HE loans would be greatly appreciated!

Re: NFCU HELOC Approval Question

nitrov — Tue, 29 Jul 2014 23:01:48 GMT

Bump

I really need help on this. Anybody have any experiences on apping with a HELOC with them?

Re: NFCU HELOC Approval Question

ShanetheMortgageMan — Wed, 30 Jul 2014 02:26:57 GMT

How much did you buy your home for?

What type of improvements will you be doing?

How much will they cost?

How much do you anticipate the home would appraise for after those improvements have been completed?

Re: NFCU HELOC Approval Question

nitrov — Wed, 30 Jul 2014 14:10:21 GMT

I bought it for $347k, need to demo a carport and driveway and build a garage and new driveway, which will cost about $27k total. The house should appraise for $425k conservatively once those improvements are made. I'm looking to refi the loan once everything is completed and believe the house should be at under 80% LTV at that point, so I'd be able to get my payments down significantly by getting out of FHA plus getting a better rate.

Re: NFCU HELOC Approval Question

ShanetheMortgageMan — Wed, 30 Jul 2014 21:42:06 GMT

So if you take out a 2nd mortgage to do the improvements, and then later refinace your 1st mortgage into conventional & would also be using it to pay off the 2nd mortgage, then it would be considered a cash out refinance, where you'd be limited to 85% LTV.

If you take out a 2nd mortgage to do the improvements, and then later just refinance your 1st mortgage into a new conventional 1st mortgage but do not pay off the 2nd mortgage, then it'd be considered a rate/term refinance, where you could go up to 95% LTV/CLTV. The second mortgage would remain in place by "subordinating" to the new 1st mortgage refinance.

Assuming you put down just 3.5% on the $347k sales price, so $334,855 is the loan amount, and add the $27k to it, the loan amount would be $361,855 which is 80% of $452,318. You mentioned the home would appraise for $425k conservatively, so getting everything within the 80% LTV to avoid PMI may be tough. Guess the appraisal is going to be the determining factor on if you can refinance afterwards.

Worst case is you could refinance the existing 1st and keep the 2nd mortgage in place, if that is your plan then I see little risk since you'd just need a $418,568+ appraised value for the 1st mortgage to be no more than 80% LTV.

Would replacing a carport with a garage increase the value by $78k over the purchase price though? Seems to be quite an increase. Perhaps you bought your home under market value though.

Re: NFCU HELOC Approval Question

nitrov — Wed, 30 Jul 2014 21:54:29 GMT

@ShanetheMortgageMan wrote:
So if you take out a 2nd mortgage to do the improvements, and then later refinace your 1st mortgage into conventional & would also be using it to pay off the 2nd mortgage, then it would be considered a cash out refinance, where you'd be limited to 85% LTV.

If you take out a 2nd mortgage to do the improvements, and then later just refinance your 1st mortgage into a new conventional 1st mortgage but do not pay off the 2nd mortgage, then it'd be considered a rate/term refinance, where you could go up to 95% LTV/CLTV. The second mortgage would remain in place by "subordinating" to the new 1st mortgage refinance.

Assuming you put down just 3.5% on the $347k sales price, so $334,855 is the loan amount, and add the $27k to it, the loan amount would be $361,855 which is 80% of $452,318. You mentioned the home would appraise for $425k conservatively, so getting everything within the 80% LTV to avoid PMI may be tough. Guess the appraisal is going to be the determining factor on if you can refinance afterwards.

Worst case is you could refinance the existing 1st and keep the 2nd mortgage in place, if that is your plan then I see little risk since you'd just need a $418,568+ appraised value for the 1st mortgage to be no more than 80% LTV.

Would replacing a carport with a garage increase the value by $78k over the purchase price though? Seems to be quite an increase. Perhaps you bought your home under market value though.

I don't want to refinance the HELOC, only the first mortgage. I'm going to be refinancing the first with the same lender who's giving me the HELOC (assuming I get it), which is NFCU. They base their values for HELOCs off BPO unless you order a full appraisal, and I'm fairly certain right now the house as-is with the improvements I've already done would appraise for $400k. Since they would be holding the 2nd, there'd be nothing to subordinate or no issues there besides them taking over the 1st.

By the time I refinance, I'll owe right around $328k. As long as the appraisal after the garage and driveway comes back north of $425k, I'll be fine reaching the 80% LTV benchmark, which based on today's rates would put me at 4% with no $372 PMI payment PLUS the garage is going to save me about $1200/yr on my insurance because of the roof that's not considered insurable that's over the carport now. All-in-all, I could be saving almost $600-700 per month not including any HELOC payments. I'm fine with paying down the HELOC separately and having it as needed, or maybe paying it down with the refi if I have room.

I did buy the house under market value and I've already put a decent amount of money into it. If it came back better than $425k I would be ecstatic, but who knows.

I am still concerned and trying to get info as to what would be my best shot of getting the HELOC. I would rather do this than refi with cash out at a higher LTV and be stuck with a higher 30-year rate and payment.

Re: NFCU HELOC Approval Question

ShanetheMortgageMan — Wed, 30 Jul 2014 22:51:42 GMT

Unless there is a clause in the second mortgage that specifies otherwise, they'll still need to be subordinated. Since the new 1st mortgage would be with NFCU, then subordinating the 2nd mortgage may just be a formality (as in NFCU would just provide the subordination agreement automatically) and not something that would need to go through a separate approval process for.

But since you are only looking to refinance the 1st mortgage it sounds like you shouldn't have much of a problem.

Can't help you with your questions on the qualifications for an NFCU HELOC, as I've never had one from them, but I suspect that qualifying before those new accounts hit your report may be the better way to go. You can always reapply after they report just in case you don't get approved now.