A common product in the mortgage industry, a Home Equity Line of Credit (HELOC) can be a useful tool for homeowners. The equity in your home is the difference between the amount you owe on your mortgage and the amount your home is worth.
Home equity loans can also be taken out on a home you don’t yet own, to serve as a down payment. Combined with a traditional mortgage in the first position, it forms your entire mortgage package.
While the uses for home equity lines are many, not all banks offer the same rates or terms. It pays to shop around.
What is a Home Equity Line of Credit?
To understand a home equity line of credit, you need to know how to calculate the equity in your home. A simple example is; if you have a mortgage of $100,000 on a home worth $200,000, you have $100,000 of equity. A HELOC allows you to tap into that equity in the form of a revolving line of credit. It can be used for a remodeling project, to replace an expensive second mortgage, or for costly repairs.
Unlike a home equity loan, you can draw on a HELOC and take out as much or as little as you need. When you repay any withdrawals, you could take that money out again later. It functions similarly to a credit card, once you’ve paid it down, you can withdraw more.
PNC Home Equity Lines of Credit Options
PNC offers a home equity line of credit with a minimum of $10,000 to borrowers who already own a home. Home equity loans, which will have fixed repayments, start at $1,000. They also have a product called Home Equity Rapid Refinance which is for borrowers who want to refinance their first mortgage at a lower rate.
The withdrawal period is limited to ten years, after which the HELOC is frozen and you repay it over a 30-year term. The annual fee is $50. You have two choices for monthly payments. One payment will only cover interest, the other covers a portion of the principal and interest.
PNC Home Equity Lines of Credit Requirements
They do offer low rates but require excellent credit scores to qualify for many of their mortgage products. If your score is below 740, they’re unlikely to work with you. Your debt-to-income ratio also can’t exceed 45%.
To apply, you’ll need W-2’s for the past two years, recent pay stubs, and possibly your federal income tax returns. You will also have to provide proof of identity, such as a driver’s license or passport.
PNC Home Equity Lines of Credit Customer Service and Reviews
It’s difficult to apply online, and you might want to go into a branch and apply in person. PNC only operates in 19 states, so your options for in-person customer service will be limited. PNC also doesn’t have great customer reviews and scored low in a J.D. Power consumer satisfaction survey.
Other Options for Home Equity Lines of Credit
US Bank also offers home equity loans and lines of credit. They, too, have stringent credit and qualification guidelines. The draw period can be longer, up to 15 years. They don’t disclose their rates up front, though they say that they’re based on Prime, you have to complete a calculator with your home’s details to get an estimate.
Chase gives existing customers a discount on their home equity lines of credit. Like PNC, you can only make withdrawals for ten years before the line converts. They disclose that their rates are between 5.75% to a maximum of 8.14%. They have over 5,000 branches nationwide, so if you need in-person help it should be easy to find.