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PenFed Credit Union: 2024 Home Equity Review

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At a glance

NMLS: 401822

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4.5
Rating: 4.5 stars out of 5
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Loan amount

$25,000 to $500,000

Credit Good

Min. credit score required

680

Rates

Repayment terms

10-year draw period and 20-year repayment period

Funds available in

Not specified

PenFed Credit Union features

Here's a breakdown of some of the benefits and drawbacks of PenFed Credit Union home equity loans.

Benefits

  • With a PenFed HELOC, you can lock in a fixed APR on some or all of your balance (with a minimum of $10,000) during the draw period.
  • The maximum loan amount and combined loan-to-value (CLTV) ratio can vary by loan, but you’ll have the flexibility to borrow as little as $25,000 or as much as $500,000 with CLTV ratios as high as 85 percent on owner-occupied properties and second homes (80 percent in Texas on owner-occupied properties). 

Drawbacks

  • Unlike banks and other lenders, credit unions require you to join as a member before being eligible for a loan (or in this case, a HELOC). While it’s possible for anyone to join PenFed, it’s an extra complication that could be a deal-breaker for some.
  • PenFed covers most of the closing costs on its HELOCs, but if you close your account within three years, you’ll be required to reimburse the lender for the closing costs it paid on your behalf.

Home equity loan products offered

PenFed’s home equity lines of credit range from $25,000 to $500,000 and include a 10-year draw period followed by a 20-year repayment period. There are, however, some limitations. For example, the CLTV ratio limit is 85% for loans on both primary and secondary residences.

PenFed’s HELOCs can also be converted to a fixed-rate option, allowing you to freeze some or all of your HELOC balance at a fixed interest rate, with a minimum of $10,000 per fixed-rate advance. You can have three separate fixed-rate advances open at a time, with a maximum of two new advances per year. The repayment terms for these advances is 20 years.

Types of fees charged

PenFed doesn’t charge any lender fees at closing for its HELOCs. However, you might be on the hook for taxes, notary fees and an appraisal fee if required, and you’ll have to reimburse closing costs if you pay off or close your loan within 36 months of opening the line of credit. You’ll also be charged a $99 annual fee, but this can be waived if you pay $99 in interest within the preceding 12-month period.

Other regular fees to be aware of are a returned check fee of $20, a late fee of 5 percent and an over credit limit fee of $10.

How to qualify for a HELOC with PenFed Credit Union

For a HELOC, PenFed requires a minimum credit score of 680 and a debt-to-income (DTI) ratio of no more than 50 percent. PenFed also requires proof of income, at least one year of W-2s, at least two months’ of your most recent bank account statements and a mortgage statement for all properties owned. You might also need to provide documentation for current debts and self-employment income. Remember that you do need to be a member of the credit union to receive funds.

How to apply with PenFed Credit Union

You can start the application process with PenFed online, including applying for membership. To become a member, you’ll need to maintain a $5 savings account with the credit union.

Alternatively, you can request a call from a loan officer. For any questions during the application process, you can call customer service at 800-970-7766, Monday through Friday from 7 a.m. to 11 p.m. ET, Saturday from 8 a.m. to 11 p.m. ET or Sunday from 9 a.m. to 5:30 p.m. ET, or send a secure message online.

How Bankrate scored PenFed Credit Union

Affordability 9.6/10
Availability 8.8/10
Borrower experience 8.4/10

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