What is a Chase Home Equity Loan?
With 5,000 branches in the United States, and a stellar reputation (particularly for customer service), Chase is a fantastic place to get a home equity line of credit (HELOC). However the bank does not provide home equity loans (the difference between the two being one is a lump sum loan, and the other is a line of credit that can be borrowed in chunks).
A Chase HELOC is particularly beneficial for existing Chase customers, as they are able to get up to 0.62% off a standard variable interest line of credit – which typically ranges from 5.75% to 8.14%. Chase also offers the option to convert to a fixed-rate lock option during the draw period of the loan. Factors for your individual interest rate include loan amount, home value, credit score, income, and home occupancy status.
Chase Home Equity Loan Application Process
The first thing you’ll want to check before considering a HELOC with Chase is whether or not you’re eligible. Chase HELOCs have many of the same requirements as other home equity lines of credit, with a few specifics around numbers. Chase requires a credit score of at least 680, your credit history must be devoid of any bankruptcies, foreclosures, repossessions and mortgage delinquencies.
Chase requires proof of income, which includes paystubs, W2s, tax returns, proof of investment income. You may apply as a retired person, however you need to provide the previous two years of tax returns and any Social Security or pension award letters and investment or IRA statements. Chase provides a full list of income documents accepted for the application process.
Like most other home equity lenders, Chase requires a loan-to-value ratio (LTV) of less than 80%. To calculate your loan-to-value ratio, you add the amount of credit requested, plus the amount owed on your mortgage, and then divide by your estimated home value. In essence what you owe in total over the value of your home.
Chase typically extends home equity loans to individuals for their primary residence – be it townhouse, co-op, condo, duplex, or townhouse. Second mortgages can be accepted if the right criteria is met, however this is definitely less common.
To apply for a home equity line of credit, you can go into any Chase branch in person, or apply online or calling on the dedicated Chase home equity phone numbers. You may apply by yourself, or with a co-applicant such as a spouse.
Once you send in all your documents, your application will usually take 45 days to close. After closing, you have 3 days to cancel your account, in a time period known as “right of rescission”, however you may also not withdraw from your credit line during this time.
Loan Rates & Fees
Chase HELOCs are variable interest rate loans (also known as “adjustable-rate”), meaning the amount you pay interest depends on the current interest rate . Chase’s current variable interest rates range from 5.75% to 7.64% for loans over $100k, with a higher maximum APR of 8.14% for loans under $100k.
Chase’s variable rates are based on the American Prime Rate, which is published daily in The Wall Street Journal and is defined as “[t]he base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks.”
- This rate is used for determining many other other home equity rates. However because prime rates are tied to the Federal Funds Rate, it’s not possible to give a definite interest rate that will hold constant over the entire loan draw period.
Minimum payments during your draw period (the period of time you’re allowed to use your line of credit) include your principal plus interest. This amount will change during the repayment period, the period of time after your draw period during which you are responsible for repaying your loan.
It is generally recommended to try and make more than your minimum monthly payment, as you’ll both incur less interest, and restore equity into your home.
One of the benefits of Chase home equity line of credit are low fees. There are no closing costs or application fees, with the exception of cities counties and states that require payments of certain taxes and stamps (these are listed below). There is a one time $50 origination fee and a $50 annual fee, however this origination fee is waived if you are already a Chase Home equity customer.
While Chase HELOCs are all for variable rates (meaning the interest rate on your loan goes up or down on a daily basis), Chase does offer the ability to “lock in” a certain amount at a current specified rate. The rest of the amount outside the lock is still available, and in fact you can create up to 5 “locks” over the lifetime of your loan.
- To illustrate this with numbers, imagine you have a home equity line of credit worth $100k. Say you are able to “lock in” a very good rate of 5% but only want to take out $30k of your equity line. You now have $70k left unlocked in your equity line, and $30k to be paid back monthly at 5% interest. If you decide you need more at any point you can leverage any of the $70k remaining, including by locking in other amounts for other rates. The advantage of a fixed rate is you’ll know exactly how much you owe each month, whereas monthly payments on a variable rate fluctuate.
There is no fee to convert from a variable home equity line to a fixed home equity line, which is one of the attractive offerings of Chase. However, if you wish to cancel a lock, there is a 1% fee for the original amount of the lock, and this must be done within 45 days. The minimum lock amount is $1,000 and the minimum length of time for a lock is 12 months. The maximum amount is 95% of the limit of your line of credit.
How to Maximize your HELOC
One of the best ways to take advantage a home equity line of credit from Chase is if you are an existing customer with Chase Bank. Below we outline the three ways to get a lower interest rate as a Chase Bank customer.
- Open A Chase Account. Customers get 0.25% off the standard variable rate when they have a qualified checking, savings or investment account. Qualified accounts also include CDs, Chase Retirement Money Market Accounts and investment and annuity products offered by JPMorgan Chase & Co. Balances in Chase Money Purchase Pension and Profit Sharing Plans don’t qualify. Chase credit cards also don’t qualify.
- Set Up Automatic Payments With Chase. An easy gimme discount, customers get 0.12% off their variable rate when setting up automatic home equity payments from their Chase checking account (which we recommend in general).
- Provide Contracts or Bids for Home Improvement Project. One of the most common reasons for taking out a home equity loan is home improvement. Chase rewards this re-investment in your home by offering 0.25% off when you show evidence of $30k worth of home improvement, or withdraw $30k from your home equity line at closing. However keep in mind this discount is not available to HELOC customers with more than 3 years remaining in their draw period.
Finally, it is worth mentioning if you are going to get a Chase home equity line of credit, it may be worth getting a line worth more than $100k. While the APR of the loan depends on a variety of factors, the maximum APR for loans over $100k is 7.64%, compared to a max of 8.14% for loans of $50k – $99k. The minimum APR for all variable rates of any loan amount is 5.75%.
Chase Home Equity Loan Restrictions
As stated before, Chase does not offer a traditional home equity loan, only home equity lines of credit (HELOCs). Chase does not offer HELOCs in Alaska, Hawaii or South Carolina. Property insurance is required to get a home equity loan through Chase. The minimum allowable HELOC is $25k ($10k in Michigan only), and interest rates may be higher for amounts under $50k. Property in AL, FL, GA, MD, MN, NY, OK, TN or VA will require a mortgage recording tax, and those in the Orleans Parish of Louisiana will pay a flat fee of $325. The maximum draw period for a home equity loan is 10 years and a repayment period of 20 years.
Overall, we’d say Chase is a very attractive option for HELOC if you are an existing Chase customer, or would be interested in opening an account. Regardless of your decision, we always recommend shopping around with at least a few home equity lenders to compare rates. If you’re still undecided, looking more into the fundamentals of home equity loans help you understand the mechanics of leveraging your home equity for credit.
Pros & Cons
Chase is one of the largest banks and home equity lenders in the country, making them a great choice for people who want easy access to a branch. They also have a reputation for good customer service, and are a particularly good choice for existing Chase Bank customers.
The main drawback for Chase HELOCs is they are all initially adjustable rate loans, meaning there is a lot of variability around how much interest you’ll eventually own. However their ability to lock in rates helps mitigate much of this.
- One of the largest HELOC lenders in the country
- Discounts for existing Chase customers
- Ability to ‘lock in’ rates
- You can’t start with a fixed rate
- No home equity loans; only HELOC
- Minimum credit score and loan amounts may disqualify some applicants
- Not available in HI, AK, and SC
Chase HELOCs are a great option for anyone looking to get access to credit. They have a draw period of 10 years, and the ability to lock in rates up to 5 times during the lifetime of the loan. The application process takes about 45 days and will require standard paperwork, however there are no exceptional requirements.
If deciding between Chase and another bank for a home equity line of credit, your existing accounts may tip the balance, with those banking with Chase at an advantage for taking out HELOCs with the company.