PennyMac HELOC Rates & Equity Calculator
Your HELOC Estimation
Combined Loan-to-Value (CLTV): %
Estimated Monthly Interest-Only Payment: $
Remaining Useable Equity: $
Qualification Status:
Understanding PennyMac HELOC Rates
A Home Equity Line of Credit (HELOC) with PennyMac allows homeowners to leverage the equity built up in their property. Unlike a standard home equity loan, a HELOC functions more like a credit card, where you only pay interest on the amount you actually draw from the line.
How HELOC Rates are Determined
HELOC rates are typically variable and are based on the Wall Street Journal Prime Rate plus a margin. PennyMac determines your specific margin based on several factors:
- Credit Score: Borrowers with scores above 740 typically receive the lowest margins.
- Combined Loan-to-Value (CLTV): This is the total of your first mortgage and your requested HELOC divided by the home's value. PennyMac generally looks for a CLTV under 85%.
- Debt-to-Income (DTI) Ratio: Your ability to manage monthly payments across all debts.
Example Calculation
Suppose you have a home valued at 500,000 with a mortgage balance of 300,000. You want a credit line of 50,000.
Your Combined Loan-to-Value (CLTV) would be: (300,000 + 50,000) / 500,000 = 70%. Since this is well below the 85% threshold, you are in a strong position for approval. If your interest rate is 8.5%, your interest-only payment during the draw period would be approximately $354.17 per month for the full 50,000 draw.
PennyMac HELOC Features
PennyMac offers flexible terms that often include a 10-year draw period followed by a 20-year repayment period. During the draw period, many borrowers opt for interest-only payments to keep costs low while focusing on home renovations or debt consolidation. It is important to remember that once the draw period ends, payments will increase significantly as you begin paying back both principal and interest.