|Home Equity Line of Credit
|Home Equity Loan
- You will receive "equity line "
checks that that can be used to advance yourself
a loan up to your approved available balance.
Simply write the loan amount you need and deposit it into your money account.
- You can use it like a credit card, where all
transactions will be posted to your equity line
even though your
account is protected against fraudulent use,
the last thing you need is having your home
exposed to potential fraud in the event you
lose or someone obtains access to
your equity credit card.
- We recommend that you refuse the card that is tied to your home equity line account.
use the standard credit card to pay for purchases find a credit card that offers rebate programs at our card center
links to our credit card center: SayCards.com
The credit card belongs to the bank, so you won't expose your home equity line to potential fraud. You will pickup the 25-day grace period before the charged amount will be due. You can then use your equity line checks to pay off the credit card charge.
- Don't issue an equity line check to a vendor or establishment. You don't want your equity line checks floating through the clearing system.
- Simply advance yourself money from your equity line and deposit it into your regular money checking account. Then use your checking account to pay the vendor
- Even though you are protected against potential fraud, you want to avoid the hassle of getting your accounts rectified in the event they are violated.
- Note that these checks can be used by others, so keep
them protected in your home. Never carry these
checks with you.
- You might also consider using pre-paid credit
cards to manage your equity line spending. See
- This means that your rate can increase or decrease
whenever the PRIME RATE changes. The rate
(APR) is calculated by taking an margin (percentage)
and adding it to the PRIME RATE.
- The interest (APR) that will be charged
to your account will be only on the amount
you actually use, not on the total amount
of your credit line.
- If the lending institution uses an index other
than the "PRIME RATE", request from
your lender a review of historical changes for
the index rate being used. Compare this trend
against the historical
trends for the "PRIME RATE" to
note frequency changes in APR and how high the
rate has climbed.
- All home equity line accounts must list
the rate cap. This cap may
vary by state.
- interest only payments plus any penalty-related
- repayment percentage of the principal plus
interest and any penalty-related fees.
Example: your minimum payment may be 0.5% of the principal balance divided by 12 plus interest and any penalty-related fees.
- Any minimum principal repayment made on a monthly basis will not reduce
your balance to zero at the time your draw period ends.
Minimum principal payments are not designed to payoff the credit line. You will be required to pay off the credit line when your draw periods ends.
- During your draw period, you should be able to pay down your equity
line account at any time without prepayment
penalties. If no, find another lender.
- The advance feature is usually available
for 5-10 years at most lending institutions,
at which time you may renew your equity line
option, payoff the loan amount, or convert
your equity line balance over to a fixed rate
equity loan amortized at repayment terms set
by the lender.
- Again, these terms may differ by lender.
Some lenders do not offer a renewable feature
or allow conversion of the equity line balance
over to fixed-rate amortized loan.
Please review the terms before making your
- The money is advanced to you when you close
your equity loan
- This advance is an one-time loan, with no
further advances made on your account.
- The rate will not go up or down during the
repayment period of the loan.
- The amount and number of payments depend
on the repayment terms of your loan. Lenders
offer a range of repayment terms, generally
from 5-20 years.
calculate your repayment amount
- You need to check the lender's prepayment
terms. Some lenders will charge a prepayment
penalty under certain circumstances.
|How Much Can You Borrow
approved available equity line or loan balance
is secured by the equity value in your home:
- The total amount approved depends on your
- These amounts are determined by taking a
percentage of the appraised value of your
home and subtracting the balance owed on the
Let's say that your home has an estimated
market value of $250,000. The amount that
you still owe on your first mortgage and any
other liens is $100,000. The maximum amount
you can borrow is calculated as follows:
your own LTV borrowing amount