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Should I Use the Aven Visa or Refinance My House?

Question:

Dear Steve,

I’m trying to decide whether to try the Aven Visa or refinance my house to get money. I tried for a reverse mortgage – it wouldn’t have helped me. My friend and I are trying to move out of the city to find some acreage for our greenhouse.

Have you heard about the Aven Visa card? According to the letter I got from them, it is “the world’s first credit card backed by home equity.”

It has an interest rate starting at 3.49% and a credit limit of $250K. It’s tempting – if it is real and legit. Didn’t find much info about it online so far. What do you think? Thanks.

Carol

Answer:

Dear Carol,

I had not heard of the Aven HELOC card before, so I researched.

The website for the card makes some interesting statements.

For example, it says, “Home equity lines of credit often come with high fees (usually over $1000), minimum advances, minimum credit limits (often at least $50,000), and take 4-6 weeks to close.”

I’m not sure where they got their facts from, but I just assisted a good friend to get and close a large HELOC at the local Credit Union in two weeks with zero fees.

Today, it appears they are a licensed lender in the following states: Arizona, California, Colorado, Florida, Illinois, Iowa, Maryland, Montana, Nebraska, Tennessee, Washington, DC.

I do like the fact they provide access to their documents to do your research in the disclosure section of their site.

From those documents, I learned some interesting information.

The account is an adjustable-rate mortgage and can go up. They provide a link to this and this CFPB brochure to help explain how it works.

They identify the company as “Aven Financial, Inc. and its affiliates, including Aven Financial Technologies, Inc., Aven Crypto, Inc., and Aven Auto, Inc.”

For HELOC lines over $100,000, they have potential additional requirements. For example, they say, “For some Accounts over $100,000, Account activation is also contingent on title insurance and hazard insurance listing Aven/Coastal Community Bank as payee.”

They will “will take a security interest in your home. You could lose your home if you do not meet the obligations in your agreement with us.” That is pretty standard with any HELOC.

Your account could be terminated, and the entire balance could be due. They say, “Under certain circumstances, we can (1) terminate your account, require you to pay us the entire outstanding balance in one payment, and charge you certain fees; (2) refuse to make additional extensions of credit; and (3) reduce your credit limit.”

There is a balance transfer fee of 2% of the amount.

When it comes to your ongoing interest rate, they say, “The annual percentage rate can change quarterly. There is no limit on the amount by which the rate can change in any one-year period. The maximum ANNUAL PERCENTAGE RATE that can apply is 18%. Ask us for the specific rate limitations that will apply to your account.”

If we were looking for some stability in a fixed interest rate, you could look for a fixed-rate HELOC, they do exist, or a cash-out refinance on your primary home and get a fixed-rate mortgage.

The Aven Visa looks attractive for a short-term need where the balance can be paid off in a few months but for me; I’m always a bigger fan of a fixed-rate loan.

By the way, I know you mentioned a 3.99% rate, but their website uses the example of a margin of 4.74% above the base rate. So pay special attention to the margin or speared on any loan any lender offers you.

Please comment below and let me know what you decide to do.

Sincerely,


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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