The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Gin1984 on August 09, 2020, 03:39:30 PM
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We are buying a house within the next year and have discussed getting a HELOC soon after as a safety net. I don't know much about them and want to learn. Is there a general standard of when you can get one? Are most capped at 80% of value? And what do you consider the best banks or credit unions for HELOCs?
I live in the Maryland area for any credit union recommendations.
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When I got a HELOC I looked at local banks and credit unions first, but none had rates as competitive as the lender I ultimately went with, Third Federal. Their current HELOC rate is 2.99% which is a lot lower than the big banks I've seen. The whole process was over phone/e-mail with a secure portal to upload all the necessary documents.
If you bought your home recently enough, they may allow you to use your previous appraisal, but if not you'll have to get a new one. 80% LTV ratio is pretty standard; if you find a lender that will allow you to go higher than that, know that you'll pay for it in higher rates and/or fees, so read the fine print.
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I am all for HELOCs. One thing to keep in mind if using it as a safety net is that during the last recession, banks cancelled HELOCs at an alarming rate. Even if you still had a job many people had their helocs cancelled.