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Frequently Asked Questions: Home Equity

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Popular Questions:
  • What are the differences between a home equity loan and a home equity line of credit?

    When looking at a home equity loan vs line of credit, the main differences are:

    • A home equity loan has a fixed-rate. A line of credit has a variable interest rate that adjusts with the Prime Rate.
    • With a home equity loan, you make fixed payments of principal and interest. With a home equity line of credit, you are only required to make interest payments during the draw period.
    • With a home equity loan after closing, you get the entire loan amount in one lump sum. By contrast, a line of credit is available for a long-term draw period, which you can access with home equity line of credit checks or through online banking. If you pay down principal during your draw period, you can borrow that principal again if you want to.
    • Learn more about home equity loans or lines of credit

  • What is the difference between a fixed-rate and a variable rate?
    Understanding rates is important when you're trying to understand what a home equity loan is and how it is different from a line of credit. Fixed-rate home equity loans have interest rates that don't change during the life of the loan. Variable-rate home equity lines of credit have rates that are linked to an index, such as Prime or LIBOR
    Stands for the London Interbank Offered Rate. The British Bankers Association uses information gathered from a survey of multiple lending institutions to determine LIBOR rates.
    and therefore can change over time.
  • Do I need to get a home appraisal?

    After we review your application and collateral information, we will determine the type of appraisal needed and talk to you about how it will get done.

  • What amounts are included in my monthly payments?

    Home equity lines of credit require interest-only payments during the draw period. However, you can pay both interest and principal if you choose. Note that interest-only payments do not build home equity. At the end of your 10-year draw period, your balance will be converted to a principal and interest monthly payment during the repayment period. At the end of the draw period, even if the interest rate stays the same, your monthly payment will increase, possibly significantly, because you will be required to pay both principal and interest. Home equity loans are paid in full over the life of the loan, in equal monthly payments that contain both principal and interest. For both home equity products, you can always make additional payments toward principal. Use our calculator to help estimate your monthly payment.

  • What will my rate be?

    There's no way to say what your exact interest rate will be on your home equity loan or line of credit until your application is completed, but our calculator can help you estimate based on preliminary factors. Your final interest rate is based on factors such as your credit history (FICO score) and ability to repay, the value of your home and the loan or line amount, to name a few.

  • What are the differences between a home equity loan and a home equity line of credit?

    When looking at a home equity loan vs line of credit, the main differences are:

    • A home equity loan has a fixed-rate. A line of credit has a variable interest rate that adjusts with the Prime Rate.
    • With a home equity loan, you make fixed payments of principal and interest. With a home equity line of credit, you are only required to make interest payments during the draw period.
    • With a home equity loan after closing, you get the entire loan amount in one lump sum. By contrast, a line of credit is available for a long-term draw period, which you can access with home equity line of credit checks or through online banking. If you pay down principal during your draw period, you can borrow that principal again if you want to.
    • Learn more about home equity loans or lines of credit

  • What is the difference between a fixed-rate and a variable rate?
    Understanding rates is important when you're trying to understand what a home equity loan is and how it is different from a line of credit. Fixed-rate home equity loans have interest rates that don't change during the life of the loan. Variable-rate home equity lines of credit have rates that are linked to an index, such as Prime or LIBOR
    Stands for the London Interbank Offered Rate. The British Bankers Association uses information gathered from a survey of multiple lending institutions to determine LIBOR rates.
    and therefore can change over time.
  • What if I want to make interest-only payments?

    With a home equity line of credit (HELOC), you are only required to pay interest on the outstanding principal balance during the draw period. You can make principal payments during the draw period, but they aren't required. If you do repay principal during the draw period, those funds can be borrowed again.

    Note that interest-only payments do not build home equity. At the end of your 10-year draw period, your balance will be converted to a principal and interest monthly payment during the repayment period. At the end of the draw period, even if the interest rate stays the same, your monthly payment will increase, possibly significantly, because you will be required to pay both principal and interest.

    Home equity loans on the other hand require a fixed monthly payment of both principal and interest.

  • Do I need to get a home appraisal?

    After we review your application and collateral information, we will determine the type of appraisal needed and talk to you about how it will get done.

  • How fast will I get my money?

    Typically it takes about 45 days from application to funding, but can vary depending on your individual situation and how quickly we receive the required documentation to complete your application.

  • What is the difference between interest rate and APR?

    The interest rate is the cost to borrow the money. The APR is the total cost you’ll pay for the loan and its origination, including interest and any fees.

  • Are there closing costs with home equity loans and lines of credit?

    There are no closing costs with a home equity line of credit or loan.

  • What amounts are included in my monthly payments?

    Home equity lines of credit require interest-only payments during the draw period. However, you can pay both interest and principal if you choose. Note that interest-only payments do not build home equity. At the end of your 10-year draw period, your balance will be converted to a principal and interest monthly payment during the repayment period. At the end of the draw period, even if the interest rate stays the same, your monthly payment will increase, possibly significantly, because you will be required to pay both principal and interest. Home equity loans are paid in full over the life of the loan, in equal monthly payments that contain both principal and interest. For both home equity products, you can always make additional payments toward principal. Use our calculator to help estimate your monthly payment.

  • How do I figure out how much equity I have?

    Determining equity is simple. Take your home's value, and then subtract all amounts that are owed on that property. The difference is the amount of equity you have.

    To determine your home’s value, use your best guess or find a home value estimator. We can also help you determine your home’s current worth.

    Ex: If you have a property worth $200,000, and the total mortgage balances owed on the property are $120,000, then you have a total of $80,000 in equity.

  • What Is LTV and why is it important?

    LTV stands for loan-to-value. It is the total amount of liens on the property divided by its fair market value.

    LTV is used to determine how much you are eligible to borrow and is one of the factors used in determining your interest rate. A lender typically allows you to borrow up to 80% LTV. The lender will multiply the lower of the purchase price or the estimated market value by 80%, then subtract the outstanding liens on the property. The remaining balance represents what you may be able to borrow. Keep in mind that LTV requirements may vary by state and lender.

    Ex: If you have a property worth $200,000, and the total mortgage balances owed on the property are $120,000, then you have a total of $80,000 in equity. If a lender typically allows you to borrow up to 80% LTV, then you would be eligible to borrow $40,000 in equity.

  • What are the benefits of using home equity?

    Using the equity in your home is a great way to improve your property, consolidate high-interest debt, finance important life events, or even cover unexpected emergencies. The interest rate you get is often lower than with unsecured loans. And is often tax deductible. Consult a tax advisor for more information.

  • How do I find out my home’s value?

    When you first apply for a home equity line or loan, you can use a home value estimator. However, we will determine the value during your application process.

  • Is the interest I pay tax deductible?

    Interest you pay on a loan that is secured by your primary residence may be tax deductible. Consult with a tax advisor to determine whether the interest you pay is eligible.

  • How do you decide if I qualify for a loan (or line)?

    When reviewing your application information, an underwriter examines three main factors to assess whether you qualify for the loan and is also used to determine your interest rate:

    1. Your credit history (FICO score)
    2. Your loan-to-value ratio
    3. Your debt-to-income ratio

  • What will my rate be?

    There's no way to say what your exact interest rate will be on your home equity loan or line of credit until your application is completed, but our calculator can help you estimate based on preliminary factors. Your final interest rate is based on factors such as your credit history (FICO score) and ability to repay, the value of your home and the loan or line amount, to name a few.

  • Do I need to have perfect credit?

    If your credit score is high you may receive better rates and have more options available to you taking out a home equity loan or line of credit. But simply having some credit issues in the past won’t necessarily disqualify you from getting a loan or a line. However, your credit history needs to demonstrate both willingness and ability to repay on time.

  • How do I order checks?

    We have partnered with Deluxe to provide safe and convenient options to order personal checks, Home Equity Line of Credit checks, or Personal Line of Credit checks:

    Online Banking: Log In | Enroll
    (order checks through the Account Details section, then under Account Options)

    Online Through Deluxe: Order Checks
    (order directly with Deluxe, our preferred check provider)

    By Phone: 1-866-322-1350

    In Person: Find A Branch

    When you place your order using any of these convenient options, be sure to select your check style and confirm the following:

    Name and Address
    Routing Number
    Account Number
    Check Starting Number

    Please note: If you would like to change a name or address on your checks, please visit a branch near you or call us at 1-800-922-9999 to complete your order.

    Your checks will be sent in a flat, easy to assemble, streamlined package in a blue envelope.

  • Who can I contact with questions about my order?

    Deluxe has a toll-free number you can call for more information. It is 1-877-984-4146. Or you can email Deluxe at feedback@deluxe.com.

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