PenFed HELOC at A Glance
- Fixed rate or variable rate: Variable, with the option of converting part or all to fixed rates
- How do I withdraw funds? Don’t specify
- Origination fee: No
- Loan to-value ratio: The maximum combined loan-to value ratio of your HELOC (primary mortgage) and your HELOC is 80%
- Time to Fund: Doesn’t specify
PenFed Credit Union, a large credit union in the United States, offers HELOCs along with mortgages and other types loans. To obtain a HELOC, you will need to be a member.
These are just a few other things you should keep in mind.
Pros
- Ability to change from a variable rate to a fixed one
- Credit limit range for large credit lines
- Option to make interest only payments during the draw period
Cons
- Credit score requirements are high
- For closing an account too early, there are penalties
- Website lacks specific information
Four things you need to know about a PenFed
These are some important facts about PenFed Credit Union’s HELOCs.
1. Available credit lines with high limits
PenFed offers HELOCs from $25,000 to $1 Million. This is good news, as if you have sufficient home equity you might be able fund a major project or to pay for another expense.
PenFed has a higher maximum loan amount than other lenders. This can be a big plus for borrowers who are looking for a bigger line of credit.
2. Flexible terms for repayment
PenFed’s HELOC provides several options for repayment. A HELOC initially will be at a variable rate which changes with the prime, but you can convert any part or all of it to a fixed rate to make predictable payments.
These “Fixed Rate Advances” are what PenFed refers to, but there are some restrictions. The advances cannot exceed $10,000 and you cannot have more than one at a time. There will only be one term option available: 240 months.
The draw period offers you the opportunity to make interest-only payment, which can help keep your payments low in the beginning. However, this could lead to higher payments in the future.
3. Credit requirements are strict and penalties for early closing
PenFed has many benefits, but it might not be for everyone. PenFed is a lending institution that requires credit scores of at least 700. This may discourage some borrowers from applying.
PenFed can be a less desirable option for some borrowers due to the penalties associated with early account closure. PenFed will require you to repay all prepaid closing costs if you intend to close your HELOC in less than three years.
4. The rates and equity limits aren’t the most competitive
PenFed’s rates and terms for loans are not the best. PenFed has lower rates than other lenders, but you may also be able to find HELOCs which allow you to borrow up to 90% or 95% of the value of your home.
What credit score do you need to get a HELOC loan?
HELOCs are subject to different credit requirements from different lenders. Higher credit scores will make you more likely to be approved and receive better rates. PenFed needs a minimum 700 credit score for its HELOCs.
What is a PenFed Credit Union (HELOC) good for?
PenFed Credit Union HELOC might be an option for those with good credit and who need flexible loan amounts or repayment terms.
PenFed allows you to convert your variable rate HELOC to fixed rates. This is a great option for those who need to know how much they will have to repay each month.
PenFed HELOCs are also great for any type of project, large or small. You may be eligible for credit lines from $25,000 to $1 Million depending on your equity.
How to Apply for a PenFed HELOC
PenFed HELOC applications are easy to apply for. PenFed makes it easy to apply online.
Remember that you must be a member to apply for credit union membership. PenFed also requires minimum credit scores 700. They will verify that your debt-to income ratio is within acceptable limits (36% in general, but some lenders may allow higher DTI).
The following information is required:
- At least one year worth of W2s is required to prove income.
- Two months of the most recent bank statements
- Documentation of any properties that you own
You may need to verify your income streams and provide additional information about your debts.
Are you unsure if PenFed Credit Union would be right for your needs? These are some alternatives.
- Citizens Bank This bank offers HELOCs without appraisal, application or closing fees.
- Lower : If you are looking for a HELOC to allow you more equity in your home, this lender might be worth considering.