Home Equity Lines of Credit (HELOC)
Like home equity loans, HELOCs require you to use your home as collateral for the loan. This may put your home at risk if your payment is late or you can't make your payment. Loans with a large balloon payment (a lump sum usually due at the end of a loan) may lead you to borrow more money to pay off this debt, or they may put your home in jeopardy if you can't qualify for refinancing. And, if you sell your home, most plans require you to pay off your credit line at the same time.
If you are a qualified homeowner with available equity, a HELOC can provide you with:
- Secured financing based on the equity in your home, which typically results in lower interest rates than many unsecured forms of credit.
- A revolving source of funds that you can borrow against and pay back as many times as you'd like during the draw period.
- Potential tax benefits (consult your tax advisor regarding deductibility of interest).
You will have monthly payments which include both principal and interest:
- During the draw period, your minimum payment will be the lesser of $100.00 or 1.5% of the balance.
- If you withdraw additional funds during the draw period or the variable-interest rate changes, your monthly payment may change.
- During the repayment period, your payments are recalculated monthly to repay your principal balance over the remaining months.
Understanding the phases of a home equity line of credit:
- Draw period - The draw period is the fixed length of time during which you can access funds from your home equity line of credit. It runs for 10 years from the date you open the account. Your annual percentage rate (APR) during the draw period is typically variable and tied to the prime rate.1
- End of draw - End of draw refers to the date your draw period ends and you can no longer access funds from your home equity line of credit.
- Repayment period - After your draw period ends, you'll enter the repayment period. Your access to funds will end and your payment structure will change to principal-plus-interest payment tied to the variable rate.
|Home Equity Line of Credit (HELOC)|
|Effective Date: 3/16/17|
|Apply now $15,000 minimum line|
|Loan to Value||Term||APR*|
|Up to 80%||20 years||As low as 4.00%|
|80.01-90%||20 years||As low as 4.750%|
|* The home equity line of credit Annual Percentage Rate (APR) is variable and is based on the highest Prime Rate published each day in The Wall Street Journal Money Rates Table (the "Index"), plus a margin. Advertised rate is based on rates as of 3/16/2017 and subject to change. The minimum line of credit amount is $15,000. Minimum APR is 0%. Maximum APR (Lifetime Rate Cap) will be 18%. Your APR will be based on the specific characteristics of your credit transaction, including evaluation of credit history, CLTV, property type, amount of credit, term, and geographic location. There is a $60 annual fee. The early termination fee will be $350 if terminated within the first 36 months. No closing costs for closed loans that meet FFCU criteria. Applicant will owe any costs for loans that do not close. These costs may vary based on the stage of the application. This account has a Draw Period of 10 years, after which you will be required to repay any amounts within a 10-year Repayment Period, depending upon your account balance. Hazard and, if applicable, flood insurance required. New Firelands Federal Credit Union Home Equity Accounts are subject to credit qualification, income verification, and collateral evaluation. Additional restrictions, limitations and exclusions may apply.|