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In many ways, PenFed offers the best of both borrowing worlds: the wide availability, longevity and conveniences of a major bank, combined with the competitive rates and low costs of a credit union. Its main weakness: the lack of physical branches, for those who prefer the personal touch.
In business since 1935, PenFed (officially Pentagon Federal) was founded in 1935 as a credit union for government and military employees. Today, it is the third-largest credit union in the U.S., with 2.9 million members around the country (enrollment is now open to all) and $35.4 billion in assets.
Because PenFed’s interest rates are consistently on the low end and they charge few fees, the lender scores 5 out of 5 for affordability.
PenFed’s nationwide footprint results in a 4.5 out of 5 for availability, the score dampened a bit by only one product and the $25,000 loan minimum.
Due to the limited branch locations and rate opacity, the borrower experience score dips to 4 out of 5.
With a focus on service to public employees, the company has a trustworthy reputation.
PenFed retains a 4+-star rating on TrustPilot, where many consumers commend their swift rate processing and approval processes.
To date, fewer than 150 complaints have been filed in the Consumer Finance Protection Bureau (CFPB) database that are specific to PenFed’s HELOC product. By comparison, some similarly-sized national banks have tallied thousands of complaints for HELOCs specifically.
PenFed’s home equity lines of credit range from $25,000 to $500,000 and include a 10-year draw period followed by a 20-year repayment period. They are traditional, variable rate HELOCs, but they can be converted to a fixed-rate option, allowing you to lock some or all of your balance, with a minimum of $10,000 per fixed-rate advance. You can have three separate fixed-rate balances open at a time, with a maximum of two new advances per year. The repayment terms for these fixed-rate balances is 20 years.
For a HELOC, PenFed requires a minimum credit score of 680 and a debt-to-income (DTI) ratio of no more than 50 percent. PenFed also requires proof of income, at least one year of W-2s, at least two months’ of your most recent bank account statements and a mortgage statement for all properties owned. You might also need to provide documentation for current debts and self-employment income.
PenFed does require a combined loan-to-value (CLTV) ratio limit of 85 percent for loans on both primary and secondary residence; that figure is 80 percent for condominiums and for any property located in Texas.
Remember that you do need to be a member of the credit union to apply for a home equity line of credit.
You can tap into your home equity — the difference between your home's worth and what you owe on your mortgage — with a home equity loan or a HELOC. With those funds, you can tackle a variety of expenses, like debt consolidation or home renovations.
However, before you dive in, it's important to figure out your loan-to-value ratio (LTV). Lenders use your LTV to determine how much of your equity stake you can actually borrow. (It’s typically 80 percent, although some lenders allow you to access as much as 90 percent.) The amount of equity they’ll let you tap is one consideration when choosing a lender. Be it a retail bank, online lender or credit union, it may offer different home equity loan rates and terms, too. That’s why it’s important to shop around for the best deal.
You can start the application process with PenFed online, including applying for membership. To become a member, you’ll need to open and maintain a $5 savings account with the credit union. You will have to close the HELOC over the phone or via e-notary, if your state allows it.
Alternatively, you can request a call from a loan officer. For any questions during the application process, you can call customer service at 800-970-7766, Monday through Friday from 7 a.m. to 11 p.m. ET, Saturday from 8 a.m. to 11 p.m. ET or Sunday from 9 a.m. to 5:30 p.m. ET, or send a secure message online.
Selected lender
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NMLS: 401822
Bankrate score
4.5
Bankrate scores are objectively determined by our editorial team. Interest rates, fees, loan terms, borrower requirements and customer service are some of the factors that make up Bankrate's score.
Customer score
N/A
Star ranking and total number reflects the lifetime customer reviews received while this lender has been an advertiser on Bankrate. To help serve you with relevant information, the customer reviews shown are limited to only those that this advertiser has received during the past 12 months.
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![]() NMLS: 401052
Bankrate score
4.9
Bankrate scores are objectively determined by our editorial team. Interest rates, fees, loan terms, borrower requirements and customer service are some of the factors that make up Bankrate's score.
Customer score
2.6
Star ranking and total number reflects the lifetime customer reviews received while this lender has been an advertiser on Bankrate. To help serve you with relevant information, the customer reviews shown are limited to only those that this advertiser has received during the past 12 months.
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![]() NMLS: 462289
Bankrate score
4.6
Bankrate scores are objectively determined by our editorial team. Interest rates, fees, loan terms, borrower requirements and customer service are some of the factors that make up Bankrate's score.
Customer score
3.2
Star ranking and total number reflects the lifetime customer reviews received while this lender has been an advertiser on Bankrate. To help serve you with relevant information, the customer reviews shown are limited to only those that this advertiser has received during the past 12 months.
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Loan amount |
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$25,000 to $500,000 |
$25,000-$1,000,000 |
Up to $400,000 (up to $100,000 in some states) |
Min. credit score required |
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680 |
700 |
640 |
Repayment terms |
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10-year draw period and 20-year repayment period |
10-year draw period and 20-year repayment term for HELOC (5-year to 20-year repayment term for fixed-rate HELOC); 5 years to 20 years for home equity loan |
Standard credit card repayment (at least 1% of the statement balance plus interest); with cash-outs, you can lock in payments for 5-10 years |
Funds available in |
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15 days |
Undisclosed |
With 7 business days |
Recent customer review |
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Customer review No reviews available yet. N/A |
The absolute worst HELOC underwriting ever! Hello- I have been in underwriting for five weeks. I'm 62, I've been through about 15 mortgage applications. I can assure you that they don't have a clue what they are doing. ... Jim . |
Low offer and extremely high rates and fees They offered me a very low amount compared to other lenders and on top of that offered a rate of 9.99% plus 4.5% cash out ( this cash out is a scam because it is an origination fee... Heloc |
NMLS: 401822
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