PenFed HELOC Review 2024
Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners and here's how we make money.
- 50+ mortgage lenders reviewed and rated by our team of experts.
- 40+ years of combined experience covering mortgages and financial topics.
- Objective, comprehensive star rating system assessing 120+ categories and 5,000+ data points.
- Governed by NerdWallet's strict guidelines for editorial integrity.
Our Take
4.0
PenFed’s HELOC stands out for its fast closing, which can be completed in just 15 days. PenFed also offers a fixed-rate option, has no origination fees and does not require a minimum initial draw. However, borrowers will need to join the credit union, as well as pay an annual fee of $99.
Pros
- Some borrowers may be eligible for closing in as little as 15 days.
- Advertised introductory rate is below the current prime rate.
- Application is available online and via mobile app.
- No origination or transaction fees.
Cons
- Annual fee of $99.
- Credit score requirements are on the higher side among lenders we review.
- Credit union membership is required to finish the application.
Lender | Max. loan amount | Max LTV | Min. credit score | |
|---|---|---|---|---|
$400,000 | 85% | 640 | Visit Lenderat Figure at Figure | |
$750,000 | 80% | 580 | Visit Lenderat New American Funding at New American Funding | |
$350,000 | 80% | 680 | Visit Lenderat Rocket Mortgage, LLC at Rocket Mortgage, LLC |
Full Review
PenFed HELOC rates
Most home equity line of credit, or HELOC, interest rates are indexed to a base rate called the prime rate. The annual percentage rate, or APR, that you’re offered will include a margin the lender has added to the prime rate. These margins depend largely on factors like your credit score, your existing debt and the amount you wish to borrow, but they will vary by lender.
Current prime rate | Prime rate last week | Prime rate in the past year — low | Prime rate in the past year — high |
|---|---|---|---|
7.75% | 8% | 7.75% | 8.50% |
On the day we checked, the advertised introductory rate offer for PenFed HELOCs was 0.125% below prime. Potential borrowers can receive a customized quote online by providing personal details, including their email address and phone number.
PenFed offers a fixed-rate HELOC option, with the ability to lock in your interest rate for up to three draws at any given time.
Applying for a PenFed HELOC
Borrowers can apply for a PenFed HELOC online, over the phone or via mobile app. While you can begin an application without being a member of the credit union, you will be required to join later in the process.
Be prepared to provide personal information like your identification and social security number, as well as financial documentation such as bank statements, pay stubs, W-2s and mortgage documents.
Applicants can receive customer support via online chat or over the phone. The online chat feature is powered by a bot rather than a live agent, and when we tried it, the response capabilities were limited.
Opening and using a PenFed HELOC
PenFed HELOCs have a maximum borrowing limit of 85% of the value of your home, minus any remaining liens. Borrowers have 10 years to draw from the line of credit and 20 years to repay it — this is the industry standard, though some lenders offer more flexibility. There is no initial draw requirement.
PenFed does not charge origination fees or prepayment penalties; however, borrowers must pay an annual fee of $99.
Borrowers can access via mobile app or by ordering paper checks. You can also use your online banking dashboard to transfer funds from your HELOC account into a checking or savings account.
» MORE: Best HELOC lenders
Alternatives to a PenFed HELOC
Borrowers who are drawn to PenFed’s fast closing may also be interested in a HELOC from Figure, which can be funded in as few as five days.
HELOC borrowers who want to minimize fees may be a fit for Truist.
HELOCs offer a flexible way to access home equity over a period of time and pay interest only on the funds you withdraw. However, rising interest rates can bump up your monthly payment, and, as with credit cards, it takes discipline to avoid overspending.
Alternatives to home equity lines of credit include a home equity loan, which offers a lump sum with a fixed rate or a cash-out refinance, which replaces your existing mortgage with a larger loan.
PenFed also offers a home equity loan and cash-out refinancing.
NerdWallet’s HELOC star ratings are awarded by the editorial team based on the following evaluated factors: HELOC volume, combined loan-to-value ratio, whether a fixed-rate option is available, lender fees, initial draw requirements, flexibility of draw and repayment terms, digital application availability, customer support options and transparency to consumers on key factors. A recent regulatory action against a lender may affect its HELOC star rating.
