HELOC process advice

8 Replies | Knoxville, Tennessee

I'm currently in the process of fixing up my primary residence in preparation for an appraisal to use for obtaining a HELOC. I was wondering if anyone else has gone through the process of obtaining a HELOC through a lender, and what tips/advice you would share for the process? I'm also wondering which lenders provide good rates and turn-around times for setting up the HELOC (and should I go local or go with a nationwide lender).

We opened a HELOC recently, and they didn't do a real appraisal. I suppose it could be different if you've done major improvements, but in our case they just sent a guy with a camera to make sure the place was still standing.

We used PenFed, because we couldn't beat their rate anywhere else. However, we weren't looking for the largest possible line of credit. In general, a higher LTV comes with a higher interest rate. Figure out your LTV before you start comparison shopping, or you'll be looking at apples and oranges.

I'm in a situation where the home I moved into (about 16 months ago) was a new construction in a very new/empty part of the neighborhood, and the appraisal pretty much matched the purchase price... but since then, the neighborhood has filled with new homes with similar or worse specs that are being listed and sold for more than $10-20k+ above that appraisal.

So my question then is: when a lender looks at LTV, do they calculate this based on the fair market value as of today, or would they need to use my original appraisal figure? I'm assuming with a lender like PenFed who doesn't need to do an appraisal if the CLTV is below a certain value, that they're using some formula to ballpark the current value. I'd like to know what that is (or maybe I just have to contact them for that), because my neighborhood is so new and booming that every agent and investor I've talked to in the local area is hard-pressed to make solid evaluations beyond what sale prices are tending to pop up.

@Colin Courtney I went with Community Trust Bank, pretty sure they also offer services in TN. They will do HELOC for up to 90% of LTV and it was a very easy process. I only did 80% and took it out on one of my rentals. They also do not have a seasoning period at all from my understanding. Best of luck.

Try to find the non-profit credit unions. They generally have the best rates. Don't know of any in Knoxville -- yet -- but I assume they're here. 

@Colin Courtney . I went to the bank where I have my personal and business checking accounts. It's easier to move funds around and make payments. It's also a form of "bundling", the more business you do with one provider the more favorable the terms should be. Other lenders may provide you financial incentives to open checking or other accounts with your HELOC, so if your current bank doesn't have a good HELOC offer they may lose more than just your HELOC business. Tell this to the bank manager or relationship manager, they'll be motivated to work the system for you. At least start with them and you'll have a good offer to compare against alternatives. In my case the lender did a drive by appraisal so the effort you invest to fix things up to get the biggest loan may not be fruitful.