Review: Getting a HELOC from DCU

DCU HELOC BankingWe have built some equity in our house thanks to the housing appreciation in the bay area.   I decided to open up a HELOC (home equity line of credit) to have easy access to the equity.  In this post, I’ll talk about why I decided to get a HELOC, how to select the lender/bank process, and subsequent application the process, and finally our experience with using it.  

Why I got a HELOC?

It’s an easy way to access your equity.  By choosing the right lender/bank, there is no cost to get a HELOC.  And if you are not drawing money from the HELOC, there is no cost to keep it around.   I got it for two reasons,

  1. As some of you know, I have been looking at buying investment properties, this would give me the cash needed for down payment, or potentially even to buy the whole thing with cash.
  2. For the rainy day.  For example, our tax this year was much higher than I had expected, and I owned uncle Sam quite a bit of money.  Rather than selling off stocks, I paid the government from the HELOC, and paid back over time.

Obviously, HELOC is a form of a loan, and could impact your ability to borrow additional money.   That’s not a big deal for us.

Shop around for banks and rates

Now it’s time to go shopping.  I did some research and set a few criteria for select the right HELOC for me.  You may have different ones

  1. No cost to get the HELOC.  As I didn’t specific needs for the HELOC, I didn’t want to cough up money ahead of time.
  2. No cost to keep the HELOC.  Again, I didn’t specific needs for the HELOC, I didn’t want to pay to maintain it.
  3. Rate.  Of course, get the lowest rate possible.
  4. Easy access to the money.  It needs to act like a bank account, I should be able to write a check, get a cashier check etc.
  5. Bank with good reputation and service.
  6. Loan amount.  We were looking for a substantial amount, some lenders had a maximum cap that were below our loan amount.

Things I didn’t care as much

  1. What % of home value you are able to borrow?  Most lenders allow you to get up to 80% of the value of your home, some more, some less.
  2. Option to turn HELOC into fixed rate loan.  Didn’t really case for that, in my experience, I can generally get a better rate with a fixed rate loan than from HELOC.  This option makes it more convenient, but not necessary.
  3. Physical bank branch.  I’m very comfortable with doing business on line, it’s no big deal.

1 and 2 were a given, I filtered out anything that didn’t meet those criteria.  I started locally first with the banks in the city we live in, Wellsfargo, Bank of America, Chase, none had great rates.  Mostly were around prime + 0.25%/0.5% range, I knew I could do better.

I then started to wide my search to online banks and credit unions as well. DCU (Digital Federal Credit Union based in Massachusetts) offered the best rate, Prime – 0.25%.  I looked through a number of reviews/sources to make sure it’s a reputable lender.

Applying for the HELOC

Overall, DCU made it pretty simple.  I filled out a form on line, a couple days later, the bank assigned a person Donna (yes, a real person) to work with me and guide me through the process.  We used a combination of email/phone for communications, I provided the requisite standard documents which wasn’t too bad.  Some of the other lenders I worked required a lot documentations (Provident credit union in particular was difficult on this front).

I dealt with Donna throughout the entire process rather than passed from rep to rep which I was quite pleased.  The process was pretty quick, they arranged for a appraiser which they paid directly to estimate the value of our home to determine how much loan we can get.  I based our original ask using Zillow estimate and houses sold recently in our neighborhood, my estimate turned out to be pretty accurate.  A few weeks  later, I was approved.  They arranged for mobile notary to come to my house to do the signing.  And throughout the entire process All in all I would give a 5 for the application process.

Using the HELOC

When I got the HELOC, I didn’t have a specific purpose in mind.  But soon, the opportunity arises.  Our tax this year was much higher than I had expected, and I owned uncle Sam quite a bit of money.  Rather than selling off stocks, I paid the government by writing a check again my DCU HELOC account.   Yeah, it worked as I intended.  This part was simple.

Now paying back, I paused our regular monthly investment to pay back DCU.  Now I ran into some issues,

  1. DCU didn’t send regular monthly paper statement.  So I didn’t even know when my payment was due and how much I needed to pay.
  2. I couldn’t find a way to link my regular checking account to DCU to enable bill pay.  I had to go with the old fashioned way to write a check.
  3. DCU had a very rudimentary website, and didn’t have much capability.  At the end when I was going to pay off the loan completely, I looked up the payoff amount from the website, and wrote a check against it.  But it turned out to be a few dollars short, so I ended up with some late fees and stuff.

Now that I know, I’ll work around these issues, but I wish DCU has a more capable and accurate website.

All in all, I have been pretty happy with my decision on HELOC, and will keep it around.

 

One thought on “Review: Getting a HELOC from DCU

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