PROS / Citibank does not charge an application fee.
CONS / This lender has a stricter loan-to-value ratio than most banks.
VERDICT / Citibank offers both home equity loans and HELOCs at competitive interest rates, with no application fees. We found the online application process straightforward and the customer service very good, making this a strong choice for home equity financing.
Citibank offers both home equity loans and home equity lines of credit (HELOC). The amount it can loan is less than most banks, and the loan-to-value ratio it requires is tighter, but it has excellent customer service, a smooth loan process in most cases, and competitive interest rates. It also pays closing costs, has no application fee and a low maintenance fee for HELOCs. Citibank therefore earns our Top Ten Reviews Silver Award.
Rates & Fees
The variable annual percentage rate (APR) can be as low as the prime rate plus 0.49 percent (3.74 percent at the time of our evaluation) and as high as the prime rate plus 3.74 percent (6.99 percent). The fixed annual percentage rate can be as low as 5.99 percent APR (or 6.24 percent for NY properties) or as high as 7.74 percent (7.99 percent for NY properties). There are discounts for Citibank members that apply to these rates as well.
All banks have a rate cap on variable interest rates. Citibank's is 18 percent, which is the standard. However, interest rates follow the prime rate, which has been steady for decades. It's unlikely you'll see your interest rate get this high.
Citibank will pay the closing fees on your home equity loan or HELOC. If you pay off the account within three years and close the account in the case of a HELOC, then you may have to pay back some or all of those fees. There are no application fees, but you pay a maintenance fee of $50/year after the first year. This is on the low end of maintenance fees charged by the home equity lenders we reviewed.
Citibank does not allow a second home as collateral and only lets you collateralize a one- or two-family residence if you live in New York, Illinois, the District of Columbia, New Jersey and Maryland. HELOCs and loans are not offered for collateral properties in Alaska.
To qualify, your residence needs an LTV of 75 percent or less. The LTV, or loan-to-value ratio, is the amount you owe on your home divided by its value. Most home equity lenders allow an LTV of 80 percent or more. However, its debt-to-income ratio (DTI) is higher than most, meaning it will allow you to incur more debt. Citibanks' maximum DTI is 50 percent, while the average allowed by the banks we evaluated falls closer to 40 percent.
Unlike most lenders, Citibank has different limits on home equity loans and HELOCs. For a home equity loan, you can borrow $10,000 to $100,000, while with HELOCs, the amount ranges from $25,000 to $200,000. Either way, these numbers are on the lower end of what you can borrow from other institutions.
There's no minimum draw requirement for the HELOC, even at closing, so you are free to borrow only as much as you need at a time. Funds are usually available one or two business days after the loan closes and the three-day right of rescission period passes. You have five years to draw from your loan, and can access the money via checks, ATM or transferring the funds to a linked account.
Citibank earns top marks for customer service. Calling a large bank can be a frustrating experience, but Citibank's system was one of the best we experienced. When the department isn't too busy, you can reach a loan officer immediately by calling the number on the website – no automated menus. During busier times, we were greeted immediately by a live operator who connected us with the next available agent. The loan officers were some of the most knowledgeable we spoke to and quickly answered all our questions fully. One took time to fully explain how LTV worked.
Citibank lacks live chat and email, but we found in our testing that phone conversations were the most effective way to get information. If you are looking for some general information on home equity, the Citibank website offers articles and calculators.
The online application process was straightforward and complete. You can find a checklist online detailing the documents and information you need for the application.
Citibank has excellent customer service and a smooth online application process. The home equity loans and lines of credit are overall on par with those of other lenders, although the maximum you can borrow is less than most other lenders allow. Nonetheless, the fact that it has fewer fees than most of the home equity lenders we reviewed combined with excellent service make this a top choice of banks worth pricing for your home equity financing.