What is a PNC Home Equity Loan?

Happy Asian couple excited about their PNC home equity loan.

Tap into your home equity

home equity cta - What is a PNC Home Equity Loan?

If you need a single sum of cash for a major expense, then a PNC home equity loan may be your answer. This type of fixed-rate loan provides immediate cash to borrowers that they can use for whatever they wish. Read on to find out more about PNC home equity loans and how they can benefit you.


How PNC Home Equity Loans Work

Home equity loans are home loans that are secured by the equity in the borrower’s home. This form of security usually makes these loans easier to apply for and get approval. They are essentially second mortgages that mirror primary mortgages in term and structure.

PNC home equity loans closely resemble all other home equity loans that are issued by banks, credit unions and other financial services firms. They charge fixed rates of interest and have set terms and fixed payments.

Borrowers who take out a home equity loan will receive the entire amount of the loan up front in a lump sum of cash. In contrast, a home equity line of credit is where the borrower receives nothing at the beginning and can then draw on the line at any time for any reason.

The loan can have a term ranging from 10 to 30 years, but there is no draw period. The entire term could be considered to be the repayment period.

The amount of money that borrowers can get in their home equity loans depends largely on the amount of equity they have in their homes, and the maximum loan-to-value ratio that the lender will use in its computations. Most lenders will allow for a loan-to-value ratio of 80 to 85 percent, although some lenders will go as high as 90 or even 100 percent for those who qualify.

PNC’s maximum loan-to-value ratio is 89.9%. The LTV ratio is multiplied by the home’s value. Then the property’s first mortgage and any other liens on the property are subtracted from that amount. The remainder is generally the amount that the lender will extend to the borrower as a home equity loan.


Qualification & Requirements for a PNC Home Equity Loans

Home equity loan borrowers must undergo essentially the same application process that they did when they got their primary mortgages. They must complete an application either by phone, online or in person at a PNC branch location where they will be assigned a loan officer. They must also submit the following documentation:

  • Personal information – Full name, Social Security number, date of birth, employment and income information
  • Contact information – Phone, email
  • Property information – Address, property type, estimated value
  • Requested loan amount

If you are an EMPLOYED WAGE EARNER / COMMISSIONED:

  • Most recent paystubs showing last 30 days YTD income
  • Most recent 2 consecutive years W-2s
  • For Commission Income: All items indicated above AND Most recent 2 consecutive years Personal Federal tax returns, Signed & Dated
  • For Loan Requests Greater than $250,000: All items indicated above AND most recent 2 consecutive years Personal Federal tax returns, Signed & Dated, AND Personal Financial Statement (form provided by PNC), Signed & Dated

If you are SELF-EMPLOYED

  • Most recent 2 consecutive years W-2s (if you are receiving income as an employee of the business)
  • Most recent 2 consecutive years Personal Federal tax returns (with all schedules), Signed & Dated
  • If Ownership Is 25% or Greater: All items indicated above AND Most recent 2 consecutive years Business Federal tax returns (with all schedules), Signed & Dated, AND YTD profit & loss statement and balance sheet
  • For Loan Requests Greater than $150,000: All items indicated above AND Personal Financial Statement (form provided by PNC), Signed & Dated

Traveling couple who got a PNC bank home equity loan.

If you receive SUPPLEMENTAL or RETIREMENT INCOME:

  • Most recent 2 consecutive years Personal Federal tax returns (with all schedules), Signed & Dated
  • For Social Security Income: Social Security Income Award Letter (current or most recent year)
  • For Pension Income: Pension Award Letter and/or documentation demonstrating all sources of income
  • For Investment Income: Most recent investment statements
  • For Rental Income: Current lease agreement for each unit
  • For Loan Requests Greater than $250,000: All items indicated above AND Personal Financial Statement (form provided by PNC), Signed & Dated

Required Property Information

  • Homeowners/Condo/Townhome Insurance declaration page, showing premium, deductible and coverage amount
  • If Taxes and Insurance Are Currently Being Escrowed: Most recent mortgage statement
  • If Taxes and Insurance are Currently NOT Being Escrowed: Current year real estate property tax statement
  • For Loan Amounts $500,000 or Greater: Title insurance policy from most recent mortgage (Title commitment not acceptable)
  • If Property Is in a Flood Zone: Flood insurance declaration is required. If flood insurance is required on any application dated on or after January 1, 2016, the application may be declined because the loan servicing system PNC Bank uses for Home Equity Loans does not support escrowing for flood insurance.
  • If Property Is a Condominium: Master insurance policy for condominium association

Additional Information, if applicable and may be required during the review process

  • Signed Current Year Tax Return Extension
  • Trust agreement (all pages must be submitted)
  • 30-day Payoff Statement for All Required Payoffs
  • Power of Attorney (must be recorded in same county as property)

PNC will then run the borrower’s credit report and use the borrower’s credit score to assess their creditworthiness. If they are approved, then the following additional documentation may be required:

  • Financial statements (bank and asset, retirement savings, etc.)
  • Statements of benefits for Social Security or other retirement income such as pensions
  • Information on additional properties the borrower may own

Once PNC has all of the necessary documentation, it will decide to approve or reject the borrower’s application. If the application is approved, then PNC will contact the borrower to set up a time for the loan closing. The borrower must bring a photo ID to the loan closing and sign all of the closing documents.

Tap into your home equity

home equity cta - What is a PNC Home Equity Loan?

PNC will pay for most of the closing costs, including the application fee and appraisal fee. The funds are then dispersed to the borrower and the interest rate and payments are set. The funds are dispersed on the fourth business day after the closing in order to satisfy the borrower’s 3-day right of rescission.


Typical Interest Rates

PNC home equity loan rates look as follows: the rate is calculated based on a variety of factors, including credit qualifications, loan-to-value, loan amount and other criteria. The best available rates include a 0.25% discount for automatic payment from a PNC checking account.

Couple posing for a picture outside after reviewing the PNC home equity loan rates.

Unlike home equity lines of credit, which charge a variable rate of interest, home equity loans charge a fixed rate of interest. This rate is usually tied to a major financial index such as the Prime Rate Index, which is published every day in The Wall Street Journal. However, the interest rates for home equity loans are usually higher than for home equity lines of credit (at least initially).


Pros & Cons

PNC home equity loans provide borrowers with access to a large pool of cash that is secured by their homes. This security allows the interest rates that are charged on the loan to be lower than the interest charged by other types of credit, such as credit cards, car loans, student loans and personal loans.

Home equity loans are therefore excellent vehicles for debt consolidation. And the interest charged by a home equity loan is tax-deductible if the loan is used to make home improvements. Home equity loans are also generally easier to do than a cash-out refinance. And no down payment is required on this type of PNC mortgage loan.

The chief disadvantage of a home equity loan is that if the borrower becomes unable to make the monthly mortgage payments on the loan, then PNC can foreclose on the home, leaving the borrower homeless. And if the housing market declines, then the borrower may end up owing more on the property than what it’s worth.

1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 5.00 out of 5)

loading - What is a PNC Home Equity Loan?Loading...

mark cussen - What is a PNC Home Equity Loan?

Mark Cussen is a financial counselor with more than 13 years of experience and has professional designations as a CFP®, CMFC and AFC. Mark has worked in all segments of the financial industry from investment management to mortgage loan origination, life insurance and annuities, financial planning and income tax preparation. He currently works with the U.S. military, helping service members transition financially into civilian life and in other capacities. Mark also sells life insurance and annuities on the side. He graduated from the University of Kansas with a Bachelor’s degree in English.