cancel
Showing results for 
Search instead for 
Did you mean: 

HELOC Questions (scores, terms, etc)

tag
peter1974
Regular Contributor

HELOC Questions (scores, terms, etc)

At some point in the next year, I'm considering taking an HELOC to pay off IRS debt.


I know score requirements depend on the lender, but do they typically go by mortgage scores or mainly the other FICO score models?

 

Also, when you qualify, are you given payment term options? I've seen that terms can vary from 5-30 years. 

7 REPLIES 7
oorhett
Regular Contributor

Re: HELOC Questions (scores, terms, etc)

I just went through obtaining a HELOC for myself - see https://ficoforums.myfico.com/t5/Mortgage-Loans/Using-a-Credit-Union-with-In-House-Products/td-p/624...

 

As far as scores used, each lender was different although I only was looking at smaller banks and CU. Some did use Mortgage Middle scores most used one of the bureau's fico 8 etc. The Bank I ended up with pulled and used my TransUnion Mortgage score at the time 663. 

 

Each lender was different in how they calculated the payment for DTI on the new loan, some did the payment calculation as 1.25% of the full amount, others did an amortization of the payoff period 10, 15, 20 yrs. The bank I went with used the interest-only payment on the full amount of the HELOC. This ended up being the primary issue to navigate which lender to use.  DTI requirements range from 35-45% 

 

Most Lenders no matter how they calculate the Payment for your DTI will do Interest-only payments during the "Draw" period. Then once the draw period is over amortize the payment based on what their payoff period is, they range from 5-30 yrs 30 is rare and unlikely, most are 5-20yrs. Mine is a 15 yr draw and then a balloon payment, so I have to either refinance the HELOC prior to the end of the 15 yrs or make sure it is paid down to zero.  

 

Hope this helps, I would start by asking your bank or credit union and then go out from there, some of the major banks/CU stopped offering HELOC's since Covid, Navy CU, Wells Fargo etc.., but there are still plenty and I am sure you can find one that will work for your needs. One thing I did discover is that if your asking for $250,000 or less there is typically no appraisal or at least an automated/desk appraisal. 

 

PNC Bank is supposedly very good at HELOC's but they could not confirm how they would do the appraisal for me and how they would treat my BK without pulling my credit and I was pretty far along with my current lender by the time I discovered them.

 

Good luck and let us know how it goes.  




BK 7 5/19 Discharged 09/19
Beginning Scores - EQ 579, TU 565
Current Scores(Vantage, high/current) - EQ 728/690, TU 706/685 / (Fico8/9) EX^8 697 TU^8 677 EQ^9 699
Mortgage (1/24) - EX 720 / TU 727 / EQ 713
Message 2 of 8
peter1974
Regular Contributor

Re: HELOC Questions (scores, terms, etc)


@oorhett wrote:

One thing I did discover is that if your asking for $250,000 or less there is typically no appraisal or at least an automated/desk appraisal. 

 


Interesting. So how would they determine your equity?

 

thanks for the info by the way!

Message 3 of 8
dragontears
Senior Contributor

Re: HELOC Questions (scores, terms, etc)


@peter1974 wrote:

@oorhett wrote:

One thing I did discover is that if your asking for $250,000 or less there is typically no appraisal or at least an automated/desk appraisal. 

 


Interesting. So how would they determine your equity?

 

thanks for the info by the way!


"Simple" you take the value of your property, subtract all liens = equity 

 

Determining your property value is the hard part. Most accurate is (and expensive) a full appraisal that is not practical to do when you are just trying to get an idea of worth. Having a realtor do a comparative market analysis (CMA) is the next best accurate value. 

You can check the online realtor sites for a "value" but be aware that things like zestimate can be wildly inaccurate in some neighborhood/property types 

Message 4 of 8
peter1974
Regular Contributor

Re: HELOC Questions (scores, terms, etc)


@dragontears wrote:

@peter1974 wrote:

@oorhett wrote:

One thing I did discover is that if your asking for $250,000 or less there is typically no appraisal or at least an automated/desk appraisal. 

 


Interesting. So how would they determine your equity?

 

thanks for the info by the way!


"Simple" you take the value of your property, subtract all liens = equity 

 

Determining your property value is the hard part. Most accurate is (and expensive) a full appraisal that is not practical to do when you are just trying to get an idea of worth. Having a realtor do a comparative market analysis (CMA) is the next best accurate value. 

You can check the online realtor sites for a "value" but be aware that things like zestimate can be wildly inaccurate in some neighborhood/property types 


That's what I was alluding to, how would the lender determine the value of your home without an appraisal? So, a lender would accept a CMA from a realtor or online realty site?

Message 5 of 8
dragontears
Senior Contributor

Re: HELOC Questions (scores, terms, etc)


@peter1974 wrote:

@dragontears wrote:

@peter1974 wrote:

@oorhett wrote:

One thing I did discover is that if your asking for $250,000 or less there is typically no appraisal or at least an automated/desk appraisal. 

 


Interesting. So how would they determine your equity?

 

thanks for the info by the way!


"Simple" you take the value of your property, subtract all liens = equity 

 

Determining your property value is the hard part. Most accurate is (and expensive) a full appraisal that is not practical to do when you are just trying to get an idea of worth. Having a realtor do a comparative market analysis (CMA) is the next best accurate value. 

You can check the online realtor sites for a "value" but be aware that things like zestimate can be wildly inaccurate in some neighborhood/property types 


That's what I was alluding to, how would the lender determine the value of your home without an appraisal? So, a lender would accept a CMA from a realtor or online realty site?


Sorry, missed that part. They have software that is used in desktop appraisals, similar to the online realty site but "more" accurate. If you get a low desktop appraisal you can request (and pay for) a full appraisal. 

Message 6 of 8
dragontears
Senior Contributor

Re: HELOC Questions (scores, terms, etc)

Also the lender needs to "own" the appraisal (no matter the type), so if a full appraisal is needed they will want to order it (even when you pay for it) you normally can't just hand them an appraisal. You can use a CMA to argue your case of a low appraisal but they will still do their own analysis. 

Message 7 of 8
peter1974
Regular Contributor

Re: HELOC Questions (scores, terms, etc)


@dragontears wrote:

Also the lender needs to "own" the appraisal (no matter the type), so if a full appraisal is needed they will want to order it (even when you pay for it) you normally can't just hand them an appraisal. You can use a CMA to argue your case of a low appraisal but they will still do their own analysis. 


Ah ok, got it....thanks!

Message 8 of 8
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.