What is a Citibank HELOC?
Even if you have a good-sized emergency fund socked away, there’s always the chance an expense that will suddenly arise that is larger than your savings account balance. This is where a home equity line of credit from Citibank can be the solution to your dilemma. These versatile loans offer many benefits. Read on to find out how a HELOC from Citibank could benefit you.
How Citibank HELOCs Work
Citibank HELOCs closely resemble most other home equity lines of credit on the market today that are offered by banks, credit unions and other lenders. Unlike with a home equity loan, the borrower applies for the HELOC and, after getting approved, can draw on the line of credit up to the maximum amount specified to pay for whatever he or she chooses.
Citibank HELOCs have a draw period of 5 to 10 years (the period of time during which the borrower can draw from the line of credit) and a repayment period of 20 years after the draw period ends.
There are two types of payment schedules available with the HELOC. One schedule charges interest and principal during the draw period, thus allowing the payments to remain the same when the repayment period begins. The other schedule only charges interest during the draw period, then converts to a higher interest and principal payment during the repayment period.
The loan limits for Citibank HELOCs are $10,000 minimum to $1,000,000 maximum. HELOCs are available for primary residences, second homes and vacation homes. But they are not available for mobile homes.
Borrowers who open a HELOC with Citibank can access their funds in several different ways. They can use the book of checks that they got when they closed on the loan, they can withdraw funds from a Citi ATM, they can get funds by visiting a Citi branch location in person or they can call Citi and request funds over the phone.
Citibank HELOCs do not have any origination fees or closing costs, such as an application fee. But there is an Early Closure Release fee if the borrower closes out the HELOC before 36 months have elapsed from the time of closing. This fee makes up for the closing costs paid by Citibank.
Most HELOCs have a maximum loan-to-value ratio that they will cap their loans at. The most common limits are 80% and 85%, although some lenders will go as high as 90% or even 100%. The amount of credit that a lender can extend to a borrower equals the LTV ratio of the home value minus any other mortgages or liens on the property.
The remainder is the amount of credit that the lender will be willing to extend to the borrower. Citibank’s maximum loan-to-value ratio runs from 70 to 80 percent.
Qualification & Requirements for a Citibank HELOC
There are several requirements that borrowers must satisfy in order to obtain a HELOC from Citibank. First, the borrower must complete Citibank’s loan application, where it asks questions about the borrower and their finances and home (i.e. value, condition, etc.) Then the borrower must submit the necessary documentation in addition to the application.
Borrowers who apply for an interest-only HELOC with Citibank must have at least $200,000 of assets with Citibank, either in a demand deposit account, investment account, annuity or other similar financial product. Or they can have $1,000,000 of combined assets with Citibank and other financial institutions. Then the borrower must submit the following documents:
- Loan application
- Signed copy of the borrower’s authorization to release information
- Signed copy of the request for transcript of tax return (form 4506-T)
If you are a wage or salaried employee:
- W2s from last two tax returns
- Pay stubs for the past 30 days
If you are self-employed:
- Last 2 years of federal tax returns
- K-1 form for the past 2 years
- Last 2 year of W2s, if any
If you are retired:
- Social Security, Pension or Retirement benefit award letter
- Last 2 months of retirement account statements
Citibank may also require borrowers to furnish:
- Bank, investment or other asset statements
- Information on all real estate that you own and mortgage lender information
Once Citibank has all of the documentation that it needs, it will order an appraisal of the borrower’s home so that it can compute the amount of credit that it will extend. It will also order a title report to verify that the borrower actually owns the property in question and evaluate any other mortgages on the home.
After Citibank grants final approval to the borrower, it will verify the borrower’s employment and homeowner’s insurance coverage. A Citibank processor will then work with the borrower to determine the initial draw amount of the loan and arrange to pay off any debts as needed.
At the time of closing, the borrower will have to sign the closing papers and also produce a picture ID to identify him or herself. The borrower will also have to decide whether to receive the funds requested by wire, direct deposit or check. The money will be held for three days in after closing. (If the property is located in California, this may take one additional day.)
Typical Interest Rates
Citibank’s variable home equity line of credit interest rates run from 5.34% to 8.24%, depending upon various factors. Borrowers who have a premium account of some sort with Citibank can get a rate discount.
They are also currently running a promotion (that expires on June 30, 2019) where the most qualified borrowers can get the prime rate minus 1.51% (which is currently 3.99% APY). Then the rate jumps to 6.59% thereafter. Borrowers can also convert some or all of their variable interest rate loans to a fixed rate within certain parameters during either the draw or repayment period.
Pros & Cons
Getting a credit line with Citibank comes with both benefits and drawbacks, but the former far outweigh the latter. Both Citibank customers and those who choose to pay closing costs can qualify for rate discounts, and lower introductory rates (like the one described above) are often available.
There are several ways that borrowers can access the money in their HELOCs and there are no closing costs or application fees. And even though Citibank HELOCs have variable rates, they are usually still much cheaper than credit card debt or personal loans.
A few drawbacks do apply, such as the fact that Citibank does not offer HELOCs in Alaska, and there is a minimum draw requirement from the HELOC of $25,000. And only premium account holders can get the best rates available. Finally, there is a prepayment penalty for those who close out their HELOC account within 36 months of closing on the loan.