How do I find the right Banks for a LOC?

Now, shopping for the right bank and the right Line of Credit might be a daunting task! But it doesn’t have to be! While there is never the right line of credit for everyone, here are the MUST in terms of the features that the banks are offering.

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1. MUST have the ability for online transfers between the Line of Credit to the Checking Account and voice versa.
2. MUST have at least 10 years of draw period.
3. MUST allow you to make extra principal payment to the line of credit – not just future scheduled payments.

In additions to the “must-have(s)”, here are some optional bells and whistles that certainly help make it easier to use the line of credit.

1. Automatic Sweeps from the Checking Accoun to the HELOC (Frequently found in 1st lien HELOCs). This feature allows you to deposit your money in a checking account and the banks will automatically transfer the money into the HELOC as a principal payment on a daily basis. It removes alot of the work.
2. Fixed Interest Rates for a set amount of time. (3-5 years)
3. Promotional Discount Rate for the first 12-36 months. (Great for some extra savings). These are frequently found in 2nd lien HELOCs.
4. Interest-only payment during the draw period. (Interest only is preferred. However, if they require a percentage or P&I payment that is fine too in most circumsatances. But you want the most flexibility possible in the future.
5. The highest Loan-to-value limit as possible. Even if you are not going to use the additional amount to consolidate debts. It may be best to go ahead and get the largest credit limit you can while you go thru the process. This gives you access to equity for emergencies and opportunity if the right investment opportunity becomes available. It’s better to have it an not use it than not have it and wish you had gotten larger line amount later. (Keep in mid to compare the rate at different LTV’s as 90% may be a slightly higher rate than 80% or 85%. Get the options so you can compare.)
6. Low closing costs, closing cost vary but don’t focus only on cost. You are looking for functionality , LTV and line amount so don’t sacrifice value of functionality based only on cost.
7. You want the HELOC to be your overdraft protection for your checking account if they require you to open a checking account…for FREE!
8. Two month payment deferral. This is only on 1^st lien HELOCS if you are exchanging your mortgage for a heloc. (You automatically get at least 1 month until your 1^st payment is due. If you close on the appropriate day you can arrange so you can receive a 2-month payment holiday.) Once you have chosen your bank re-watch the video on when to close to skip 2 payments or check with your support team member to confirm.

No bank is perfect so based on your individual needs you will have several good options to choose from.

Use the bank questionnaire and follow the process to explore your bank options. Then speak with your support team member to help evaluate your options as you choose which is the best fit for your specific situation.