Good local credit unions or banks for HELOC?

Question

Does anyone have suggestions for a good local credit union or bank in the Bay Area or East Bay? Looking for one that has low rates for HELOCs. Thanks!

Daniel Zapata · Answer

I went shopping for a HELOC last year and wound up using StarOne CU, primarily because most other banks wouldn't offer a HELOC over 200-300k (regardless of LTV) and the rate was reasonable (adjustable, currently 5.5%).

David Lutz · Answer

also, should mention third fed only doesn't do investment property heloc, sorry.

David Lutz · Answer

@Nguyen Quach

Payments on a P+I HELOC are going to be more consistent than on an interest only HELOC that balloons up after the draw period. Lenders are qualifying you based on the assumption you're going to max the line. The more advantageous D/I ratio is going to depend on whether the interest only lender is going to use the draw or repayment period payment to qualify you.

So it has less to do with how Third Fed does things and more to do with how the other lender will. I'm not going to speculate on that since I'm not an underwriter. The Max line, however, is going to be capped by your L/V ratio as well. So the difference between the lenders is going to disappear as the customers ability to replay the loan (higher D/I ratio) ceases to be the limiting factor.

If the D/I ratio is driving any material difference in the size of the line then it's a major concern for the lender as compared to the L/V. I'd do some major soul searching before taking less favorable terms on a larger loan amount when one of the lenders is concerned about ability to make the payments - particularly when you're only getting the larger line from an interest only lender if they're looking at your ability to make draw period payments and not repayment period payments which will be roughly twice a large.

Sorry I don't have a simpler answer, but I hope my rambling is helpful. Best, David

David Lutz · Answer

@Nguyen Quach

When I got my HELOC the "appraisal" consisted of the lender having someone drive by the house and take pictures from the street to check external home condition and put together some comparables in the area. Very quick and easy and they never bothered me.

Kunal Shah · Answer

@Natalie Hahn any particular reason you want a local CU? I was researching HELOCs 2 months back and had found Digital Federal Credit Union to offer the most competitive rates. It is not local but is very accessible.

David Lutz · Answer

Hey Cliff. The process is pretty streamlined. They do an automated property valuation or a drive by, which is free. If you don't like those numbers you can request a formal appraisal but that has a cost you pay. Assuming you want to move forward you have to submit paperwork for any income you're using to support your D/I ratio. That included my tax returns as well as rental agreements for properties I had purchased since my last returns. In general the process was pretty easy, but slow. I think it took about 4 months from when I started until I had the HELOC checkbook in my hand.

One issue I ran into recently is that credit unions (at least Third Fed) will only write you a HELOC if you have 5 or less mortgages. So if you have a primary house and more than 4 investment properties you'd need to use a different lender.  PM me if you have specific questions and I'd be happy to answer them.

Cliff T. · Answer

Hey @David Lutz  can you confirm what the underwriting process is like? Do they require tax returns?

Nguyen Quach · Answer

@David Lutz

third federal Heloc pmt gonna be interest+principal. Is that mean they count against Income by DTI ratio and will approve less equity line?

Nguyen Quach · Answer

I am wondering does any CC or banks NOT require full appraisal?

i am planning apply HELOC 200k from my rental 100% equity property.

David Lutz · Answer

If you need any details

Good local credit unions or banks for HELOC?

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