What is a Chase HELOC?
These flexible lines of credit allow you to access the equity in your home in the form of cash that you can use however you want. Chase home equity lines of credit are ideal solutions if you need cash for medical or education expenses or a new car. They can also be used to buy, build or improve the property against which they are drawn.
How Chase HELOCs Work
The home equity lines of credit offered by Chase Bank closely mirror the HELOCs offered by most other banks and credit unions. There is a draw period of 10 years and a repayment period of 20 years. There is also a $50 origination fee and a $50 annual fee, but no other closing costs, including appraisal fees and documentation expenses. And the annual fee is waived for borrowers who have a Chase Premier, Premier Plus or Premier Platinum account.
Chase’s maximum loan-to-value ratio is 80%. Borrowers can apply online at Chase.com and make payments, see their account history and transfer funds with Chase Online Banking.
Although most of Chase’s HELOCs are issued against the borrower’s primary residence, in certain circumstances a qualifying secondary piece of property may be used instead. These properties include:
- Single-family residences (such as a house, townhouse or row house)
- Attached single-family residence (such as a condominium)
- Cooperative shares (co-op)
- Two-unit residences
Borrowers can find out how much they can withdraw by using Chase’s online home value estimator. This tool will estimate their home’s value and then subtract the balance of the priary mortgage and any other liens on the home to get the amount that can be issued as a HELOC.
Borrowers can generally expect for 45 days to elapse in order to close the HELOC. Once the loan has been closed, the borrower has 3 business days to cancel the loan if they desire. The funds in the HELOC will become available to the buyer on the fourth business day after closing. Borrowers can then access their funds either online or by phone or by using the book of checks that was issued to them.
How to Qualify
Prospective borrowers who want to apply for a home equity line of credit with Chase will need to furnish the following documentation:
- Property information (address, purchase price, purchase date, property type)
- Estimated property value
- Requested line of credit amount
- Contact information (phone, mail, email)
- Personal information (Social Security number, date of birth, marital status, employment status, residential status)
- Information about any other accounts you have with us
- Employment and income information
- Information about any other debts and financial obligations (such as car loans, outstanding student loans, credit cards, current mortgage or home equity accounts)
And some or all of the following documentation will be needed during the application process:
- A completed and signed Internal Revenue Service (IRS) Form 4506T
If you receive a W-2 each year:
- Copy of most recent pay stub reflecting 30 days and YTD earnings
- Most recent two years of W-2 forms from your employer
If you are self-employed:
- Most recent two years personal IRS tax return documents including all schedules
- Most recent two years K-1’s from the partnership, LLC, or S Corporation (as applicable)
If you receive Social Security benefits:
- Copy of most recent retirement award letter or most recent 1099-SSA (Miscellaneous Income) form
- Most recent bank and investment statements
- Most recent IRS tax return (as applicable)
If you receive a pension, or retirement benefits:
- Copy of most recent bank statements
- Written verification from the organization paying income; copy of most recent award letter, most recent 1099 tax form; or most recent two years’ personal IRS tax return documents
If you are commissioned:
- Copy of most recent pay stubs reflecting 30 days and YTD earnings
- Most recent two years 1099’s or W2’s
- Most recent two years personal tax returns with all schedules
Proof of homeowners, hazard, and flood insurance:
- Hazard insurance is required for all mortgage loans and home equity lines of credit. Proof of insurance includes a policy or certificate of coverage, declarations page, a copy of the master policy from your homeowners association (if applicable), insurance binder, property insurance form or payment receipt.
- If you live in a Special Flood Hazard Area, you’ll need to send us your policy’s declarations page or a copy of the master policy from your homeowners association (if applicable) that shows you have adequate flood insurance coverage for your home you’re requesting to use as collateral.
In most cases, the minimum credit score that borrowers must have to qualify for a HELOC with Chase Bank is 680. The applicant’s recent credit history should not show any charge offs, bankruptcies, foreclosures or similar items. But there should be at least three lines of credit open for items such as car loans, mortgages and credit cards with a history of at least 24 months.
JP Morgan Chase likes for its borrowers to carry a maximum debt-to-income ratio of 43%, but they can accept up to 50% in some cases with additional restrictions and requirements. (Borrowers can calculate their debt-to-income ratios by dividing their total monthly debt payments by their monthly gross incomes.)
Although this list of documents may seem formidable, it is still probably easier to take out a HELOC than it is to do a cash-out refinance or sell the house.
Typical Interest Rates
Chase HELOCs differ from home equity loans by charging variable rates of interest based on the movement of the Prime Rate Index. Chase’s credit lines don’t have a “set” interest rate that they charge borrowers; they simply assign a rate on a per-borrower basis depending on their credit scores and other data.
Users who have certain types of Chase accounts such as checking accounts already open can qualify for a rate discount of up to 0.62% APY. Borrowers also have the option of converting some or all of their outstanding HELOC balances into a fixed rate lock option so that they are protected from rising interest rates.
Pros & Cons
The benefits that a Chase HELOC can provide are obvious: it can function as a standby emergency fund that you can tap into when you need to, and it can also help you to pay for major expenses such as medical or educational bills or to buy or repair a car.
Another key advantage is that the interest rate that is charged by the HELOC will usually be much lower than the interest rates that are charged for car loans, credit cards or personal loans. A Chase HELOC is therefore a great debt consolidation vehicle.
One disadvantage that the new tax laws brought to HELOCs is the deductibility of interest on the loan. HELOC interest used to be deductible within wide limits, but now it can only be deducted if the loan is used to build, buy or improve the residence against which the HELOC is drawn.
The biggest disadvantage of a HELOC is that if the borrower becomes unable to make the monthly payment on the loan, then Chase can effectively foreclose on the borrower’s home. Borrowers therefore need to think carefully before taking out a HELOC on their primary residence.