Navy Federal HELOC at the glance
- Fixed rate or variable rate: Variable but can be converted to fixed
- How to withdraw money: Card and checks
- Origination fee: No
- Loan to-value ratio: up to 95%
- Time to Fund: 40 to 56 Days
Navy Federal Credit Union provides a range of financial products and services for military personnel. The credit union has 12 million members.
- Competitive interest rates
- Limit on the combined loan-to value ratio
- There are no application, origination or annual fees.
- Only available to members (not accessible in Texas).
- Limited branch network
- Third-party closing costs are included in loans
5 Things You Need to Know About a Navy Federal HELOC
Here are some things to consider before applying for a Navy Federal Credit Union home equity credit line.
1. Flexible credit lines available
Navy Federal provides credit lines ranging in size from $10,000 to $500,000 which allows customers flexibility when borrowing. Remember that your home equity will determine how much credit you can get.
Your combined loan-to value ratio between your primary mortgage and the HELOC cannot exceed 95% for primary and second homes. It’s lower for investment properties at 70%.
2. You have the option to make interest-only payments
Variable interest rates are available for the HELOC, but you have the option to only pay interest during the 20 year draw period. However, once the 20-year repayment period ends, you will notice a significant increase in your monthly payments. It is important to plan for this.
Keep in mind, however, that longer repayment and draw periods may result in higher total interest.
3. Competitive interest rates
An annual percentage rate (or APR) on a Navy Federal HELOC is as low as 8.75% or 8% if you choose the interest-only HELOC. Your APR (and consequently your monthly payments) may fluctuate as the rate changes and is updated once per month.
The lender has set a minimum APR at 3.99% and maximum APR at 18% for the account.
4. Alternatives may have lower costs, but the cost of these services could be lower.
Navy Federal does not charge any upfront fees other lenders might assess. The credit union does not charge application, origination, annual, or inactivity fees.
However, closing costs are not eliminated. The credit union states that third-party fees can be as high as $2,000 for lines of credit up to $250,000. For larger credit lines, the lender does not disclose the fee range. The HELOC can be used to pay some of the closing costs, but it is not possible to include all third-party expenses.
5. Accessibility restrictions
Navy Federal, like many credit unions requires that borrowers meet certain eligibility requirements in order to be a member. The following are the groups that are not eligible for membership:
- Former or active-duty military personnel
- Families of military personnel, current or former,
- Civilian personnel from the Department of Defense
- Retirees from the Department of Defense
The credit union only has 350 branches across the country if you prefer to receive in-person assistance. You might want to look at other options if you aren’t near one.
What is the average time it takes to get a HELOC with Navy Federal?
Your HELOC will close within 40 to 55 days after you have submitted your application. However, this timeline may change if the lender needs additional documentation or an appraisal to close the loan.
After you close the loan, there are three business days for you to cancel or change your mind. If you are using your HELOC to finance a second or investment property, the waiting period does not apply.
For what purpose is a Navy Federal HELOC useful?
Navy Federal’s HELOC can only be accessed by those who are members of the credit union.
This option is available to members or those who are eligible to be one. It allows you to draw for a longer period of time and make interest-only payment during that time. If you are looking to avoid upfront lender fees and an annual fee, this option could be worth it. Keep in mind that HELOC’s upfront third party fees are comparable to the closing costs charged by other lenders.
Navy Federal also allows you to convert your HELOC into a fixed-rate equity loan. This is provided that your HELOC does not exceed six months. Fixed payments can help you budget more easily, which can be a great financial move. You should check the loan closing package to see all conditions.
How do you apply for a Navy Federal HELOC
Before you apply, make sure you are a Navy Federal member. You can apply online if you are already a member.
Navy Federal suggests that you have the following information and documentation ready when applying for a job:
- Property estimated value
- Navy Federal Savings and/or Checking Account Number
- Gross monthly income
- Information about all real estate, including current tax, homeowners association, condominium, insurance, and lien details
- Original purchase price and original purchase date
- When was the home built?
- Information about any liens that you would like to be paid
- Two most recent pay stubs
- Retirement statements
- Evidence of homeowner’s insurance
- If applicable, trust documents
You may be required to provide additional documentation if you are self-employed.
Are you unsure if Navy Federal is the right fit for your needs? These are some alternatives.
- Bank of America – Borrowers might be able to make savings with multiple rate discounts that the lender offers.
- PenFed Credit Union : Can be a great choice if your credit is excellent and you want a shorter draw period.