PremierOne Credit Union is allowing qualified California homeowners to borrow up to 100% of their property value through two new home equity products, expanding financing options for borrowers who want to preserve their existing first mortgage.
The San Jose-based credit union launched a variable-rate home equity line of credit and a fixed-rate home equity loan, each offering up to $250,000 at a combined loan-to-value ratio of as much as 100%.
That high-leverage limit is the notable piece for California mortgage brokers. While second-lien products have become an increasingly important alternative to cash-out refinancing, many home equity programs cap total mortgage debt at 80% or 90% of a property’s value.
PremierOne’s HELOC 100 carries a 10-year draw period followed by a 15-year repayment period. The credit union’s published rate sheet lists a minimum line of $5,000 and an introductory annual percentage rate as low as 8%, subject to credit approval and other restrictions.
The product is limited to owner-occupied California properties. PremierOne’s published terms say purchase transactions are prohibited for the HELOC.
The HELN 100 is a 30-year, fixed-rate second mortgage available for qualified purchase and refinance transactions. Loan amounts range from $5,000 to $250,000, with PremierOne advertising an APR as low as 9.25%.
Both products are secured by California primary residences and subject to underwriting and loan-to-value restrictions.
“These new home equity solutions give our members more flexibility when it comes to financing their homes and managing their financial goals,” said Chris Caputo, vice president of lending operations at PremierOne. “By offering both a flexible line of credit and a fixed-rate home equity loan, we’re giving members more options to choose a solution that best fits their individual needs.”
For mortgage originators, the rollout adds another competitor to California’s growing second-lien market. Homeowners who hold first mortgages well below prevailing rates may prefer to borrow against their equity rather than replace the entire loan through a cash-out refinance.
The 100% CLTV option could also reach borrowers who have accumulated equity but need access to most of it. That additional leverage comes with greater risk, however, because borrowers would retain little or no equity cushion if home prices decline.
PremierOne’s broader home equity menu includes lower-leverage HELOCs and fixed-rate loans of up to $500,000, as well as a line of credit designed to finance accessory dwelling units.
The credit union also introduced a Premier Money Market Plus Account offering tiered dividend rates to new and existing members who deposit at least $25,000 in qualifying new funds.
PremierOne membership is available to people who live, work, attend school, or worship in nine Northern California counties: Santa Clara, Santa Cruz, Monterey, San Benito, Alameda, San Mateo, Merced, San Joaquin, and Stanislaus.
