Home Equity Line of Credit

IMPORTANT TERMS OF OUR HOME EQUITY LINE OF CREDIT Property Insurance – You must carry insurance on the property that This booklet was initially prepared by the Board of Governors of the Federal mirroring changes in the value of the index. Most lenders cite the interest rate Lines of credit vs. traditional second mortgage loans. Application fee - Fees charged when you apply for a loan or other credit. for HUD-approved housing counseling agencies in your area on the CFPB’s National banks and federally chartered savings banks/associations Check List RE- MARCH MARGIN *ANNUAL MINIMUM secures this line of credit. PERCENTAGE Reserve System. The Consumer Financial Protection Bureau (CFPB) has made you will pay as the value of the index at a particular time, plus a “margin,” such If you are thinking about a home equity line of credit, you might also want These fees may include charges for property appraisal and a credit report. web site at consumerfinance.gov/find-a-housing-counselor or by calling HUD’s Office of the Comptroller of the Currency (OCC) Ask your lender to help fill out this check list. This disclosure contains important information about our Home Equity Line of YEAR PAYMENT INDEX This is a margin MONTHLY technical updates to the booklet to reflect new mortgage rules under Title XIV of as 2 percentage points. Because the cost of borrowing is tied directly to the to consider a traditional second mortgage loan. This type of loan provides you interactive toll-free number at 800-569-4287. Customer Assistance Unit Minimum Draw Requirements – None. STARTS MONTH we have used RATE PAYMENT Balloon payment - A large extra payment that may be charged at the end of PLAN PLAN Credit. You should read it carefully and keep a copy for your records. recently Rounded, if appli. the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank value of the index, it is important to find out which index is used, how often with a fixed amount of money, repayable over a fixed period. In most cases, the a mortgage loan or lease. The company that collects your mortgage payments is your loan servicer. 1301 McKinney Street, Suite 3450 Tax Deductibility – You should consult a tax advisor regarding the Act). A larger update of this booklet is planned in the future to reflect other the value of the index changes, and how high it has risen in the past. It is also payment schedule calls for equal payments that pay off the entire loan within This may not be the same company as your lender. If you have concerns about Houston, TX 77010 Basic Features A B 2007 8.25% 0.00 8.25% 100.00*** Availability of Terms – All of the terms disclosed below are subject to change. □ changes under the Dodd-Frank Act and to align with other CFPB resources important to note the amount of the margin. the loan period. You might consider a second mortgage instead of a home Cap (interest rate) - A limit on the amount that your interest rate can how your loan is being serviced or another aspect of your mortgage, you may (800) 613-6743 deductibility of interest and charges for the line. increase. Two types of interest-rate caps exist. Periodic adjustment caps limit If these terms change (other than the annual percentage rate) and you decide, 2008 □ 5.25% 0.00 5.25% 100.00*** and tools for consumers as part of the CFPB’s broader mission to educate Lenders sometimes offer a temporarily discounted interest rate for home equity line if, for example, you need a set amount for a specific purpose, such wish to submit a complaint to the CFPB at consumerfinance.gov/complaint or www.occ.treas.gov Fixed annual percentage rate ...... % % Variable Rate Information – The line has a variable-rate feature, the interest-rate increase from one adjustment period to the next. Lifetime caps as a result, not to enter into an agreement with us, you are entitled to a refund of consumers. equity lines—an “introductory” rate that is unusually low for a short period, as an addition to your home. by calling (855) 411-CFPB (2372). www.helpwithmybank.gov and the (corresponding to the periodic rate) and the 2009 □ 3.25% 0.00 3.25% 100.00*** limit the interest-rate increase over the life of the loan. By law, all adjustable- annual percentage rate Consumers are encouraged to visit the CPFB’s website at such as 6 months. In deciding which type of loan best suits your needs, consider the costs When you submit a complaint to the CFPB, the CFPB will forward your Federally insured state chartered banks that are not members of the any fees that you have paid to us or anyone else in connection with your application. 2010 □ 3.25% 0.00 3.25% 100.00*** rate mortgages have an overall cap. Variable annual percentage rate ...... % % minimum payment can change as a result. consumerfinance.gov/owning-a-home to access interactive tools and resources Variable-rate plans secured by a dwelling must, by law, have a ceiling (or under the two alternatives. Look at both the APR and other charges. Do not, complaint to the company and work to get a response. Companies have 15 Federal Reserve System Security Interest – We will take a mortgage on your home. You could Closing or settlement costs - Fees paid when you close (or settle) on a loan. The annual percentage rate includes only interest and no other costs. 2011 □ 3.25% 0.00 3.25% 100.00*** Equity for mortgage shoppers, which are expected to be available beginning in 2014. cap) on how much your interest rate may increase over the life of the plan. however, simply compare the APRs, because the APRs on the two types of loans days to respond to you and the CFPB. You can review the company’s response Federal Deposit Insurance Corporation (FDIC) • Index used and current value ...... % % lose your home if you do not meet the obligations in your agreement with us. Some variable-rate plans limit how much your payment may increase and how are figured differently: These fees may include application fees, title examination, abstract of title, title and give feedback to the CFPB. Consumer Response Center The annual percentage rate is based on the value of an index. The index is 2012 □ 3.25% 0.00 3.25% 100.00*** When Your Home Is on the Line: low your interest rate may fall if the index drops. The APR for a traditional second mortgage loan takes into account the insurance, and property survey fees; fees for preparing deeds, mortgages, and Possible Actions – Under certain circumstances, we can (1) terminate What You Should Know About Home Equity Lines of Credit Contact Information 1100 Walnut Street, Box#11 the Prime Rate published in the Money Rates section of The Wall Street Journal 2013 □ 3.25% 0.00 3.25% 100.00*** Some lenders allow you to convert from a variable interest rate to a fixed rate interest rate charged plus points and other finance charges. settlement documents; attorneys’ fees; recording fees; estimated costs of taxes If you are in the market for credit, a home equity plan is one of several For additional information or to submit a complaint, you can contact the Kansas City, MO 64106 • Amount of margin ...... your line, require you to pay us the entire outstanding balance in one payment, during the life of the plan, or let you convert all or a portion of your line to a The APR for a home equity line of credit is based on the periodic interest rate and insurance; and notary, appraisal, and credit report fees. Under the Real (if more than one Prime Rate is published, the higher rate shall be used), as most 2014 □ 3.25% 0.00 3.25% 100.00*** options that might be right for you. Before making a decision, however, you CFPB or one of the other federal agencies listed below, depending on the type (877) ASK-FDIC or (877)275-3342 and charge you certain fees; (2) refuse to make additional extensions of credit; fixed-term installment loan. alone. It does not include points or other charges. Estate Settlement Procedures Act, the borrower receives a good faith estimate recently published on the last business day of the prior monthly billing cycle. should weigh carefully the costs of a home equity line against the benefits. Shop of institution. If you are not sure which agency to contact, you can submit a www.fdic.gov • Frequency of rate adjustments ...... 2015 □ 3.25% 0.00 3.25% 100.00*** Disclosures from lenders of closing costs within three days of application. The good faith estimate lists (3) reduce your credit limit and (4), as specified in the initial agreement, implement for the credit terms that best meet your borrowing needs without posing undue Costs of establishing and maintaining a home equity line. complaint to the CFPB and if the CFPB determines that another agency would www.fdic.gov/consumers Rate Floor – The minimum ANNUAL PERCENTAGE RATE will be 3.0%. The federal Truth in Lending Act requires lenders to disclose the important each expected cost as an amount or a range. certain changes in the plan. 2016 □ 3.50% 0.00 3.50% 100.00*** financial risks. And remember, failure to repay the amounts you’ve borrowed, Many of the costs of setting up a home equity line of credit are similar to be better able to assist you, the CFPB will refer your complaint to that agency Fannie Mae, Freddie Mac, and the Federal Home Loan Banks To determine the annual percentage rate, we apply a margin to the value of the index. terms and costs of their home equity plans, including the APR, miscellaneous Credit limit - The maximum amount that may be borrowed on a credit card or and let you know. • Amount/length of discount (if any) ...... If you ask, we will give you more specific information concerning when we 2017  4.00% 0.00 4.00% 100.00*** plus interest, could mean the loss of your home. those you pay when you get a mortgage. For example: Federal Housing Finance Agency (FHFA) A fee for a property appraisal to estimate the value of your home; charges, the payment terms, and information about any variable-rate feature. under a home equity line of credit plan. □ (If Checked) The initial annual percentage rate is a discounted rate or What is a home equity line of credit? Insured depository institutions and credit unions with assets Consumer Communications can take these actions. 2018 □ 4.75% 0.00 4.75% —0— An application fee, which may not be refunded if you are turned down for credit; And in general, neither the lender nor anyone else may charge a fee until after • Interest rate cap and floor ...... a premium rate. It is not based on the index and margin used for later rate A home equity line of credit is a form of revolving credit in which your home Equity - The difference between the fair market value of the home and the greater than $10 billion (and their affiliates), and non-bank providers Constitution Center – You can obtain advances of Up-front charges, such as one or more “points” (one point equals 1 percent of you have received this information. You usually get these disclosures when you Minimum Payment Requirements 2019 □ 5.50% 0.00 5.50% —0— serves as collateral. Because a home often is a consumer’s most valuable outstanding balance on your mortgage plus any outstanding home equity loans. of consumer financial products and services, including mortgages, 400 7th Street, S.W. adjustments. The initial rate will be in effect until the billing cycle beginning the credit limit); and receive an application form, and you will get additional disclosures before the Length of Plan credit for 10 (ten) years (the “draw period”). During the draw period, payments 2020 □ 3.25% 0.00 3.25% —0— asset, many homeowners use home equity credit lines only for major items, Index - The economic indicator used to calculate interest-rate adjustments for credit cards, debt collection, consumer reports, prepaid cards, private Washington, DC 20024 . Closing costs, including fees for attorneys, title search, mortgage preparation plan is opened. If any term (other than a variable-rate feature) changes before will be due monthly. Your minimum monthly payment will equal all accrued such as education, home improvements, or medical bills, and choose not to use adjustable-rate mortgages or other adjustable-rate loans. The index rate can education loans, and payday lending. Consumer Helpline 2021 □ 3.25% 0.00 3.25% —0— and filing, property and title insurance, and taxes. the plan is opened, the lender must return all fees if you decide not to enter into Ask us for the current index value, margin, discount or premium if applicable them for day-to-day expenses. increase or decrease at any time. See also Selected index rates for ARMs over Consumer Financial Protection Bureau (CFPB) (202) 649-3811 Draw period ...... interest as of the closing date of the billing cycle, provided the payment shall In addition, you may be subject to certain fees during the plan period, such as the plan because of the change. and annual percentage rate. After you open a credit line, rate information will With a home equity line, you will be approved for a specific amount of credit. When you open a home equity line, the transaction puts your home at risk. If an 11-year period (consumerfinance.gov/f/201204_CFPB_ARMs-brochure. P.O. Box 2900 www.fhfa.gov not be less than $100.00, plus any amounts past due. Note: your minimum * The Annual Percentage Rate has been adjusted to reflect any applicable interest rate caps. annual membership or maintenance fees and a transaction fee every time you Clinton, IA 52733 www.fhfa.gov/Default.aspx?page=369 be provided on periodic statements that we send you. ** The Annual Percentage Rate reflects a discount we have used recently. Many lenders set the credit limit on a home equity line by taking a percentage the home involved is your principal dwelling, the Truth in Lending Act gives you pdf) for examples of common indexes that have changed in the past. Repayment period ...... monthly payment during the draw period may not reduce the amount of principal draw on the credit line.. (855) 411-2372 [email protected] *** Minimum Payment Amount. (say, 75%) of the home’s appraised value and subtracting from that the balance 3 days from the day the account was opened to cancel the credit line. This right - The percentage rate used to determine the cost of borrowing Rate Changes – The annual percentage rate can change at the beginning You could find yourself paying hundreds of dollars to establish the plan. And Interest rate www.consumerfinance.gov outstanding on this line of credit. owed on the existing mortgage. For example: allows you to change your mind for any reason. You simply inform the lender in money, stated usually as a percentage of the principal loan amount and as an Federally chartered credit unions Initial fees of each monthly billing cycle. The maximum ANNUAL PERCENTAGE RATE that if you were to draw only a small amount against your credit line, those initial www.consumerfinance.gov/complaint After the draw period ends, you will no longer be able to obtain credit advances Appraised value of home $100,000 charges would substantially increase the cost of the funds borrowed. On the writing within the 3-day period. The lender must then cancel its security interest annual rate. National Credit Union Adminstration (NCUA) can apply is 18.0%. Rate Floor – The minimum ANNUAL PERCENTAGE in your home and return all fees— including any application and appraisal Federally Insured state-chartered bank members of the Federal Consumer Assistance and must pay the outstanding balance over 10 (ten) years (the “repayment Percentage x 75% other hand, because the lender’s risk is lower than for other forms of credit, as Margin - The number of percentage points the lender adds to the index rate to Appraisal fee ...... RATE will be 3.0%. fees—paid to open the account. Reserve System 1775 Duke Street • Alexandria, VA 22314 period”). Payments will be due monthly. Your minimum payment will equal Percentage of appraised value = $75,000 your home serves as collateral, annual percentage rates for home equity lines calculate the ARM interest rate at each adjustment. are generally lower than rates for other types of credit. The interest you save What if the lender freezes or reduces your line of credit?. Board of Governors of the Federal Reserve System (FRB) (800) 755-1030 1/120th of the principal balance that was outstanding at the end of the draw Other than as disclosed in this paragraph, there are no annual or more frequent Minimum payment - The lowest amount that you must pay (usually monthly) Application fee ...... Less balance owed on mortgage - $40,000 could offset the costs of establishing and maintaining the line. Moreover, some Plans generally permit lenders to freeze or reduce a credit line if the value of Consumer Help www.ncua.gov period, plus the finance charges that have accrued on the remaining balance, periodic limitations on changes in the ANNUAL PERCENTAGE RATE. to keep your account in good standing. Under some plans, the minimum PO Box 1200 • Minneapolis, MN 55480 www.mycreditunion.gov Potential line of credit $35,000 lenders waive some or all of the closing costs. the home “declines significantly” or, when the lender “reasonably believes” that payment may cover interest only; under others, it may include both principal however, in no event shall the principal and interest payment be less than Maximum Rate and Payment Examples – If you had an outstanding you will be unable to make your payments due to a “material change” in your (888) 851-1920 Finance Companies, retail stores, auto dealers, mortgage companies, Up-front charges, including points ...... In determining your actual credit limit, the lender will also consider your How will you repay your home equity plan? and interest. www.federalreserveconsumerhelp.gov $100.00 monthly. Your payment will vary as the Prime Rate varies. balance of $10,000 during the draw period, the minimum monthly payment at financial circumstances. If this happens, you may want to: and other lenders, and credit bureaus ability to repay the loan (principal and interest) by looking at your income, debts, Before entering into a plan, consider how you will pay back the money you Points (also called discount points) - One point is equal to 1 percent of the the maximum ANNUAL PERCENTAGE RATE of 18.0% would be $152.88. • Talk with your lender. Find out what caused the lender to freeze or Brokerage firms, mutual fund companies, and investment advisors Federal Trade Commission (FTC) Closing costs ...... Minimum Payment Example-If you made only the minimum monthly and other financial obligations as well as your credit history. borrow. Some plans set a minimum monthly payment that includes a portion principal amount of a mortgage loan. For example, if a mortgage is $200,000, of the principal (the amount you borrow) plus accrued interest. But, unlike with reduce your credit line and what, if anything, you can do to restore it. You may Securities and Exchange Commission (SEC) Consumer Repsonse Center payments and took no other credit advances, it would take 9 years and 9 months This annual percentage rate could be reached during the 1st month of the Many home equity plans set a fixed period during which you can borrow one point equals $2,000. Lenders frequently charge points in both fixed-rate typical installment loan agreements, the portion of your payment that goes be able to provide additional information to restore your line of credit, such as Complaint Center 600 Pennsylvania Avenue, N.W. Repayment Terms to pay off a credit advance of $10,000 at an ANNUAL PERCENTAGE RATE of 3.25%. draw period. money, such as 10 years. At the end of this “draw period,” you may be allowed documentation showing that your house has retained its value or that there has and adjustable-rate mortgages to cover loan origination costs or to provide 100 F Street, N.E. Washington DC 20580 to renew the credit line. If your plan does not allow renewals, you will not be able toward principal may not be enough to repay the principal by the end of the additional compensation to the lender or broker. These points usually are paid During that period, you make 116 monthly payments of $100.00***, followed by 1 If you had an outstanding balance of $10,000 at the beginning of the repayment term. Other plans may allow payment of interest only during the life of the plan, not been a “material change” in your financial circumstances. You may want to Washington, DC 20549 (877) FTC-HELP or (877-382-4357) During the draw period to borrow additional money once the period has ended. Some plans may call for get copies of your credit reports (go to the CFPB’s website at consumerfinance. at closing and may be paid by the borrower or the home seller, or may be (202) 551-6551 www.ftc.gov payment of $78.72. period, the minimum monthly payment at the maximum ANNUAL PERCENTAGE payment in full of any outstanding balance at the end of the period. Others may which means that you pay nothing toward the principal. If you borrow $10,000, split between them. In some cases, the money needed to pay points can be you will owe that amount when the payment plan ends. gov/askcfpb/5/can-i-review-my-credit-report.html for information about how to www.sec.gov www.ftc.gov/bcp Fees and Charges – Third Party Fees to Open the Account. In order to RATE of 18.0% would be $236.21. This annual percentage rate could be allow repayment over a fixed period (the “repayment period”), for example, 10 borrowed (incorporated in the loan amount), but doing so will increase the loan Interest and principal payments ...... Regardless of the minimum required payment on your home equity line, you get free copies of your credit reports) to make sure all the information in them www.sec.gov/complaint/select.shtml Fair lending and fair housing issues open, use, or maintain your account, you may have to pay certain fees to third reached at the start of the 1st month of the repayment period. years. is correct. If your lender suggests getting a new appraisal, be sure you discuss amount and the total costs. Discount points (also called discount fees) are Once approved for a home equity line of credit, you will most likely be able to may choose to pay more, and many lenders offer a choice of payment options. Agricultural Lenders US Department of Justice (DOJ) parties in connection with opening the account. These fees generally range Historic Example – The following table shows how the annual percentage appraisal firms in advance so that you know they will accept the new appraisal points that you voluntarily choose to pay in return for a lower interest rate. Interest only payments ...... borrow up to your credit limit whenever you want. Typically, you will use special Many consumers choose to pay down the principal regularly as they do with Farm Credit Administration Civil Rights Division between $0.00 and $3,000.00, depending upon the line amount, how the rate and the minimum monthly payments for a single $10,000 credit advance would other loans. For example, if you use your line to buy a boat, you may want to pay as valid. Security interest - If stated in your credit agreement, a creditor’s, lessor’s, or Office of Congressional and Public Affairs 950 Pennsylvania Avenue, N.W. checks to draw on your line. Under some plans, borrowers can use a credit card • Shop around for another line of credit. If your lender does not want to assignee’s legal right to your property (such as your home, stocks, or bonds) property is titled, and property location. Upon request or within three business have changed based on changes in the index over the past 15 years. The index or other means to draw on the line. it off as you would a typical boat loan. 1501 Farm Credit Drive Housing and Civil Enforcement Section Fully amortizing payments ...... Whatever your payment arrangements during the life of the plan—whether restore your line of credit, shop around to see what other lenders have to offer. that secures payment of your obligation under the credit agreement. McLean, VA 22102 Washington, DC 20530 days from date you submit your application, we will provide you with an itemization values are from the last business day in the Index month of each year. While only one There may be other limitations on how you use the line. Some plans may You may be able to pay off your original line of credit and take out another one. require you to borrow a minimum amount each time you draw on the line (for you pay some, a little, or none of the principal amount of the loan—when the Transaction fee - Fee charged each time a withdrawal or other specified (703)883-4056 (202)514-4713 When the draw period ends of the fees that you will have to pay to third parties. payment amount per year is shown, payments would have varied during each year. plan ends, you may have to pay the entire balance owed, all at once. You must Keep in mind, however, that you may need to pay some of the same application transaction is made on a line of credit, such as a balance transfer fee or a cash www.fca.gov TTY–(202) 305-1882 FAX–(202) 514-1116 example, $300) or keep a minimum amount outstanding. Some plans may also fees you paid for your original line of credit. If you ask, we will give you an itemization of the fees you will have to pay The table assumes that no additional credit advances were taken, that only the require that you take an initial advance when the line is set up. be prepared to make this “balloon payment” by refinancing it with the lender, by advance fee. Small business lenders To report an incident of housing discrimination: 1-800-896-7743 Balloon payment? ...... to third parties. obtaining a loan from another lender, or by some other means. If you are unable Defined Terms [email protected] minimum payments were made each month, and that the rate remained constant What should you look for when shopping for a plan? Variable rate - An interest rate that changes periodically in relation to an index, Small Business Administration (SBA) to make the balloon payment, you could lose your home. This glossary provides general definitions for terms commonly used in the such as the prime rate. Payments may increase or decrease accordingly. Consumer Affairs Fair lending and fair housing issues Early Termination Fee – If you close your Account and request during each year. It does not necessarily indicate how the index or your payments If you decide to apply for a home equity line of credit, look for the plan that best If your plan has a variable interest rate, your monthly payments may change. real estate market. They may have different legal meanings depending on the Renewal available? ...... 409 3rd Street, S.W. Department of Housing and Urban Development (HUD) a discharge of the mortgage, within 3 years after the date the Agreement is will change in the future. meets your particular needs. Read the credit agreement carefully, and examine Assume, for example, that you borrow $10,000 under a plan that calls for context. More information the terms and conditions of various plans, including the annual percentage rate For more information about mortgages, including home equity lines of Washington, DC 20416 Office of Fair Housing / Equal Opportunity signed, you agree to pay an early termination fee of $500 to reimburse us for interest-only payments. At a 10%interest rate, your monthly payments would Annual membership or maintenance fee - An annual charge for access to (800)U-ASK-SBA or (800)827-5722 451 7th Street, S.W. Refinancing of balance by lender? ...... (APR) and the costs of establishing the plan. Remember, though, that the APR credit, visit consumerfinance.gov/mortgage. For answers to questions about certain third-party charges we incurred on your behalf in connection with this be $83. If the rate rises over time to 15%, your monthly payments will increase a financial product such as a line of credit, credit card, or account. The fee is www.sba.gov Washington, DC 20410 for a home equity line is based on the interest rate alone and will not reflect to $125. Similarly, if you are making payments that cover interest plus some mortgages and other financial topics, visit consumerfinance.gov/askcfpb. You line. Examples of such charges include property valuation fees, title charges, closing costs and other fees and charges, so you’ll need to compare these charged regardless of whether or not the product is used. may also visit the CFPB’s website at consumerfinance.gov/owning-a-home Commodity brokers, commodity trading advisers, commodity pools (800)669-9777 portion of the principal, your monthly payments may increase, unless your www.hud.gov/complaints credit report fees and recording fees. costs, as well as the APRs, among lenders. agreement calls for keeping payments the same throughout the plan period. Annual percentage rate (APR) - The cost of credit, expressed as a yearly to access interactive tools and resources for mortgage shoppers, which are and introducing brokers rate. For closed-end credit, such as car loans or mortgages, the APR includes Late Charge – The Borrower shall pay a late charge equal to ten percent Variable interest rates If you sell your home, you will probably be required to pay off your home equity expected to be available beginning in 2014. Commodity Futures Trading Commission (CFTC) the interest rate, points, broker fees, and other credit charges that the borrower Housing counselors can be very helpful, especially for first-time home 1155 21st Street, N.W. (10%) of the outstanding payment or ten dollars ($10.00), whichever is less, in Home equity lines of credit typically involve variable rather than fixed interest line in full immediately. If you are likely to sell your home in the near future, rates. The variable rate must be based on a publicly available index (such as consider whether it makes sense to pay the up-front costs of setting up a line is required to pay. An APR, or an equivalent rate, is not used in leasing buyers or if you’re having trouble paying your mortgage. The U.S. Department of Washington, DC 20581 the event any installment of principal and/or interest is not paid within fifteen agreements. Housing and Urban Development (HUD) supports housing counseling agencies (866) 366-2382 ©2021 Bankers Group Purchasing, Waltham, MA 02453 (03/2021)-36740 the prime rate published in some major daily newspapers or a U.S. Treasury bill of credit. Also keep in mind that renting your home may be prohibited under the (15) days of the due date. rate). In such cases, the interest rate you pay for the line of credit will change, terms of your agreement. throughout the country that can provide free or low-cost advice. You can search cftc.gov/ConsumerProtection/index.htm ThisThis booklet booklet was was initially initially prepared prepared by by the the Board Board of of Governors Governors of of the the Federal Federal mirroringmirroring changes changes in in the the value value of of the the index. index. Most Most lenders lenders cite cite the the interest interest rate rate LinesLines of of credit credit vs. vs. traditional traditional second second mortgage mortgage loans. loans. ApplicationApplication fee fee - -Fees Fees charged charged when when you you apply apply for for a aloan loan or or other other credit. credit. forfor HUD-approved HUD-approved housing housing counseling counseling agencies agencies in in your your area area on on the the CFPB’s CFPB’s NationalNational banks banks and and federally federally chartered chartered savings savings banks/associations banks/associations ReserveReserve System. System. The The Consumer Consumer Financial Financial Protection Protection Bureau Bureau (CFPB) (CFPB) has has made made youyou will will pay pay as as the the value value of of the the index index at at a aparticular particular time, time, plus plus a a“margin,” “margin,” such such If Ifyou you are are thinking thinking about about a ahome home equity equity line line of of credit, credit, you you might might also also want want TheseThese fees fees may may include include charges charges for for property property appraisal appraisal and and a acredit credit report. report. webweb site site at at consumerfinance.gov/find-a-housing-counselor consumerfinance.gov/find-a-housing-counselor or or by by calling calling HUD’sHUD’s OfficeOffice of of the the ComptrollerComptroller of of the the CurrencyCurrency (OCC) (OCC) technicaltechnical updates updates to to the the booklet booklet to to reflect reflect new new mortgagemortgage rules rules under under Title Title XIV XIV of of asas 2 2 percentage percentage points. points. 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In In most most cases, cases, the the a amortgage mortgage loan loan or or lease. lease. TheThe company company that that collects collects your your mortgage mortgage payments payments is is your your loan loan servicer. servicer. 13011301 McKinney McKinney Street, Street, Suite Suite 3450 3450 Act).Act). A A larger larger update update of of this this booklet booklet is is planned planned in in the the future future to to reflect reflect other other thethe value value of of the the index index changes, changes, and and how how high high it ithas has risen risen in in the the past. past. It Itis is also also paymentpayment schedule schedule calls calls for for equal equal payments payments that that pay pay off off the the entire entire loan loan within within ThisThis may may not not be be the the same same company company as as your your lender. lender. 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You You might might consider consider a asecond second mortgage mortgage instead instead of of a ahome home CapCap (interest (interest rate) rate) - -A A limit limit on on the the amount amount that that your your interest interest rate rate can can howhow your your loan loan is is being being serviced serviced or or another another aspect aspect of of your your mortgage, mortgage, you you may may (800)(800) 613-6743 613-6743 andand tools tools for for consumers consumers as as part part of of the the CFPB’s CFPB’s broader broader mission mission to to educate educate LendersLenders sometimes sometimes offer offer a atemporarily temporarily discounted discounted interest interest rate rate for for home home equityequity line line if, if, for for example, example, you you need need a aset set amount amount for for a aspecific specific purpose, purpose, such such increase.increase. Two Two types types of of interest-rate interest-rate caps caps exist. exist. Periodic Periodic adjustment adjustment caps caps limit limit wishwish to to submit submit a acomplaint complaint to to the the CFPB CFPB at at consumerfinance.gov/complaint consumerfinance.gov/complaint or or www.occ.treas.govwww.occ.treas.gov consumers.consumers. equityequity lines—an lines—an “introductory” “introductory” rate rate that that is is unusually unusually low low for for a ashort short period, period, asas an an addition addition to to your your home. home. thethe interest-rate interest-rate increase increase from from one one adjustment adjustment period period to to the the next. next. Lifetime Lifetime caps caps byby calling calling (855) (855) 411-CFPB 411-CFPB (2372). (2372). www.helpwithmybank.govwww.helpwithmybank.gov ConsumersConsumers areare encouragedencouraged toto visitvisit thethe CPFB’sCPFB’s websitewebsite atat suchsuch as as 6 6 months. months. 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FederallyFederally insured insured state state chartered chartered banks banks that that are are not not members members of of the the consumerfinance.gov/owning-a-homeconsumerfinance.gov/owning-a-home to to access access interactive interactive tools tools and and resources resources Variable-rateVariable-rate plans plans secured secured by by a adwelling dwelling must, must, by by law, law, have have a aceiling ceiling (or (or underunder the the two two alternatives. alternatives. Look Look at at both both the the APR APR and and other other charges. charges. Do Do not, not, complaintcomplaint to to the the company company and and work work to to get get a aresponse. response. 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You You can can review review the the company’s company’s response response FederalFederal Deposit Deposit Insurance Insurance Corporation Corporation (FDIC) (FDIC) SomeSome variable-rate variable-rate plans plans limit limit how how much much your your payment payment may may increase increase and and how how areare figured figured differently: differently: TheseThese fees fees may may include include application application fees, fees, title title examination, examination, abstract abstract of of title, title, title title andand give give feedback feedback to to the the CFPB. CFPB. ConsumerConsumer Response Response Center Center WhenWhen Your Your Home Home Is Is on on the the Line: Line: lowlow your your interest interest rate rate may may fall fall if ifthe the index index drops. drops. TheThe APR APR for for a atraditional traditional second second mortgage mortgage loan loan takes takes into into account account the the insurance,insurance, and and property property survey survey fees; fees; fees fees for for preparing preparing deeds, deeds, mortgages, mortgages, and and WhatWhat You You Should Should Know Know About About Home Home Equity Equity Lines Lines of of Credit Credit ContactContact Information Information 11001100 Walnut Walnut Street, Street, Box#11 Box#11 SomeSome lenders lenders allow allow you you to to convert convert from from a avariable variable interest interest rate rate to to a afixed fixed rate rate interestinterest rate rate charged charged plus plus points points and and other other finance finance charges. charges. settlementsettlement documents; documents; attorneys’ attorneys’ fees; fees; recording recording fees; fees; estimated estimated costs costs of of taxes taxes If Ifyou you are are in in the the market market for for credit, credit, a ahome home equity equity plan plan is is one one of of several several ForFor additional additional information information or or to to submit submit a acomplaint, complaint, you you can can contact contact the the KansasKansas City, City, MO MO 64106 64106 duringduring the the life life of of the the plan, plan, or or let let you you convert convert all all or or a aportion portion of of your your line line to to a a TheThe APR APR for for a ahome home equity equity line line of of credit credit is is based based on on the the periodic periodic interest interest rate rate andand insurance; insurance; and and notary, notary, appraisal, appraisal, and and credit credit report report fees. fees. 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If Ifyou you are are not not sure sure which which agency agency to to contact, contact, you you can can submit submit a a www.fdic.govwww.fdic.gov DisclosuresDisclosures from from lenders lenders ofof closing closing costs costs within within three three days days of of application. application. 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InsuredInsured depositorydepository institutionsinstitutions andand creditcredit unionsunions withwith assetsassets ConsumerConsumer Communications Communications AnAn application application fee, fee, which which may may not not be be refunded refunded if ifyou you are are turned turned down down for for credit; credit; AndAnd in in general, general, neither neither the the lender lender nor nor anyone anyone else else may may charge charge a afee fee until until after after AA home home equity equity line line of of credit credit is is a aform form of of revolving revolving credit credit in in which which your your home home EquityEquity - -The The difference difference between between the the fair fair market market value value of of the the home home and and the the greatergreater than than $10 $10 billion billion (and (and their their affiliates), affiliates), andand non-banknon-bank providersproviders ConstitutionConstitution Center Center Up-frontUp-front charges, charges, such such as as one one or or more more “points” “points” (one (one point point equals equals 1 1 percent percent of of youyou have have received received this this information. information. You You usually usually get get these these disclosures disclosures when when you you servesserves as as collateral. collateral. Because Because a ahome home often often is is a aconsumer’s consumer’s most most valuable valuable outstandingoutstanding balance balance on on your your mortgage mortgage plus plus any any outstanding outstanding home home equity equity loans. loans. ofof consumer consumer financial financial productsproducts andand services, services, including including mortgages,mortgages, 400400 7th 7th Street, Street, S.W. S.W. thethe credit credit limit); limit); and and receivereceive an an application application form, form, and and you you will will get get additional additional disclosures disclosures before before the the asset,asset, many many homeowners homeowners use use home home equity equity credit credit lines lines only only for for major major items, items, Index - The economic indicator used to calculate interest-rate adjustments for creditcredit cards, cards, debt debt collection, collection, consumer consumer reports, reports, prepaid prepaid cards, cards, private private Washington,Washington, DC DC 20024 20024 ClosingClosing costs, costs, including including fees fees for for attorneys, attorneys, title title search, search, mortgage mortgage preparation preparation planplan is is opened. opened. If Ifany any term term (other (other than than a avariable-rate variable-rate feature) feature) changes changes before before Index - The economic indicator used to calculate interest-rate adjustments for suchsuch as as education, education, home home improvements, improvements, or or medical medical bills, bills, and and choose choose not not to to use use adjustable-rate mortgages or other adjustable-rate loans. The index rate can educationeducation loans, loans, and and payday payday lending. lending. ConsumerConsumer Helpline Helpline andand filing, filing, property property and and title title insurance, insurance, and and taxes. taxes. thethe plan plan is is opened, opened, the the lender lender must must return return all all fees fees if ifyou you decide decide not not to to enter enter into into adjustable-rate mortgages or other adjustable-rate loans. The index rate can themthem for for day-to-day day-to-day expenses. expenses. increase or decrease at any time. See also Selected index rates for ARMs over ConsumerConsumer Financial Financial Protection Protection Bureau Bureau (CFPB) (CFPB) (202)(202) 649-3811 649-3811 InIn addition, addition, you you may may be be subject subject to to certain certain fees fees during during the the plan plan period, period, such such as as thethe plan plan because because of of the the change. change. increase or decrease at any time. See also Selected index rates for ARMs over WithWith a ahome home equity equity line, line, you you will will be be approved approved for for a aspecific specific amount amount of ofcredit. credit. an 11-year period (consumerfinance.gov/f/201204_CFPB_ARMs-brochure. P.O.P.O. Box Box 2900 2900 www.fhfa.govwww.fhfa.gov annualannual membership membership or or maintenance maintenance fees fees and and a atransaction transaction fee fee every every time time you you WhenWhen you you open open a ahome home equity equity line, line, the the transaction transaction puts puts your your home home at at risk. risk. If If an 11-year period (consumerfinance.gov/f/201204_CFPB_ARMs-brochure. ManyMany lenders lenders set set the the credit credit limit limit on on a ahome home equity equity line line by by taking taking a apercentage percentage thethe home home involved involved is is your your principal principal dwelling, dwelling, the the Truth Truth in in Lending Lending Act Act gives gives you you pdf)pdf) for for examples examples of of common common indexes indexes that that have have changed changed in in the the past. past. Clinton,Clinton, IA IA 52733 52733 www.fhfa.gov/Default.aspx?page=369www.fhfa.gov/Default.aspx?page=369 drawdraw on on the the credit credit line.. line.. (855)(855) 411-2372 411-2372 [email protected]@fhfa.gov (say,(say, 75%) 75%) of of the the home’s home’s appraised appraised value value and and subtracting subtracting from from that that the the balance balance 33 days days from from the the day day the the account account was was opened opened to to cancel cancel the the credit credit line. line. This This right right Interest rate - -The The percentage percentage rate rate used used to to determine determine the the cost cost of of borrowing borrowing YouYou could could find find yourself yourself paying paying hundreds hundreds of ofdollars dollars to to establish establish the the plan. plan. AndAnd Interest rate www.consumerfinance.govwww.consumerfinance.gov owedowed on on the the existing existing mortgage. mortgage. 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The The lender lender must must then then cancel cancel its its security security interest interest annualannual rate. rate. NationalNational Credit Credit Union Union Adminstration Adminstration (NCUA) (NCUA) inin your your home home and and return return all all fees— fees— including including any any application application and and appraisal appraisal FederallyFederally InsuredInsured state-charteredstate-chartered bankbank membersmembers ofof thethe FederalFederal ConsumerConsumer Assistance Assistance PercentagePercentage x x75% 75% otherother hand, hand, because because the the lender’s lender’s risk risk is is lower lower than than for for other other forms forms of of credit, credit, as as MarginMargin - -The The number number of of percentage percentage points points the the lender lender adds adds to to the the index index rate rate to to youryour home home serves serves as as collateral, collateral, annual annual percentage percentage rates rates for for home home equity equity lines lines fees—paidfees—paid to to open open the the account. account. ReserveReserve System System 17751775 Duke Duke Street Street • • Alexandria, Alexandria, VA VA 22314 22314 PercentagePercentage of of appraised appraised value value == $75,000 $75,000 calculatecalculate the the ARM ARM interest interest rate rate at at each each adjustment. adjustment. areare generally generally lower lower than than rates rates for for other other types types of of credit. credit. The The interest interest you you save save WhatWhat if if the the lender lender freezes freezes or or reduces reduces your your line line of of credit?. credit?. BoardBoard of of Governors Governors of of the the Federal Federal Reserve Reserve System System (FRB) (FRB) (800)(800) 755-1030 755-1030 MinimumMinimum payment payment - -The The lowest lowest amount amount that that you you must must pay pay (usually (usually monthly) monthly) LessLess balance balance owed owed on on mortgage mortgage - -$40,000 $40,000 couldcould offset offset the the costs costs of of establishing establishing and and maintaining maintaining the the line. line. Moreover, Moreover, some some PlansPlans generally generally permit permit lenders lenders to to freeze freeze or or reduce reduce a acredit credit line line if ifthe the value value of of ConsumerConsumer Help Help www.ncua.govwww.ncua.gov toto keep keep your your account account in in good good standing. standing. Under Under some some plans, plans, the the minimum minimum lenderslenders waive waive some some or or all all of of the the closing closing costs. costs. thethe home home “declines “declines significantly” significantly” or, or, whenwhen the the lender lender “reasonably “reasonably believes” believes” that that POPO Box Box 1200 1200 • • Minneapolis, Minneapolis, MN MN 55480 55480 www.mycreditunion.govwww.mycreditunion.gov PotentialPotential line line of of credit credit $35,000$35,000 paymentpayment may may cover cover interest interest only; only; under under others, others, it itmay may include include both both principal principal youyou will will be be unable unable to to make make your your payments payments due due to to a a“material “material change” change” in in your your (888)(888) 851-1920 851-1920 FinanceFinance Companies, Companies, retail retail stores, stores, auto auto dealers, dealers, mortgage mortgage companies, companies, InIn determining determining your your actual actual credit credit limit, limit, the the lender lender will will also also consider consider your your HowHow will will you you repay repay your your home home equity equity plan? plan? andand interest. interest. www.federalreserveconsumerhelp.govwww.federalreserveconsumerhelp.gov BeforeBefore entering entering into into a aplan, plan, consider consider how how you you will will pay pay back back the the money money you you financialfinancial circumstances. circumstances. If If this this happens, happens, you you maymay wantwant to: to: andand other other lenders, lenders, and and credit credit bureaus bureaus abilityability to to repay repay the the loan loan (principal (principal and and interest) interest) by by looking looking at at your your income, income, debts, debts, PointsPoints (also (also called called discount discount points) points) - -One One point point is is equal equal to to 1 1 percent percent of of the the borrow. Some plans set a minimum monthly payment that includes a portion •• Talk Talk with with your your lender. lender. Find Find out out what what caused caused the the lender lender to to freeze freeze or or BrokerageBrokerage firms, firms, mutualmutual fund fund companies, companies, andand investment investment advisorsadvisors FederalFederal Trade Trade Commission Commission (FTC) (FTC) andand other other financial financial obligations obligations as as wellwell as as your your credit credit history. history. borrow. Some plans set a minimum monthly payment that includes a portion principalprincipal amount amount of of a amortgage mortgage loan. loan. For For example, example, if ifa amortgage mortgage is is $200,000, $200,000, of the principal (the amount you borrow) plus accrued interest. But, unlike with reducereduce your your credit credit line line and and what, what, if ifanything, anything, you you can can do do to to restore restore it. it. You You may may SecuritiesSecurities and and Exchange Exchange Commission Commission (SEC) (SEC) ConsumerConsumer Repsonse Repsonse Center Center ManyMany home home equity equity plans plans set set a afixed fixed period period during during whichwhich you you can can borrow borrow of the principal (the amount you borrow) plus accrued interest. But, unlike with oneone point point equals equals $2,000. $2,000. Lenders Lenders frequently frequently charge charge points points in in both both fixed-rate fixed-rate typical installment loan agreements, the portion of your payment that goes bebe able able to to provide provide additional additional information information to to restore restore your your line line of of credit, credit, such such as as ComplaintComplaint Center Center 600600 Pennsylvania Pennsylvania Avenue, Avenue, N.W. N.W. money,money, such such as as 10 10 years. years. At At the the end end of of this this “draw “draw period,” period,” you you may may be be allowed allowed typical installment loan agreements, the portion of your payment that goes andand adjustable-rate adjustable-rate mortgages mortgages to to cover cover loan loan origination origination costs costs or or to to provide provide toward principal may not be enough to repay the principal by the end of the documentationdocumentation showing showing that that your your house house has has retained retained its its value value or or that that there there has has 100100 F FStreet, Street, N.E. N.E. WashingtonWashington DC DC 20580 20580 toto renew renew the the credit credit line. line. If Ifyour your plan plan does does not not allow allow renewals, renewals, you you will will not not be be able able toward principal may not be enough to repay the principal by the end of the additionaladditional compensation compensation to to the the lender lender or or broker. broker. These These points points usually usually are are paid paid term. Other plans may allow payment of interest only during the life of the plan, notnot been been a a“material “material change” change” in in your your financial financial circumstances. circumstances. You You maymay wantwant to to Washington,Washington, DC DC 20549 20549 (877)(877) FTC-HELP FTC-HELP or or (877-382-4357) (877-382-4357) toto borrow borrow additional additional money money once once the the period period has has ended. ended. Some Some plans plans may may call call for for term. Other plans may allow payment of interest only during the life of the plan, atat closing closing and and may may be be paid paid by by the the borrower borrower or or the the home home seller, seller, or or may may be be which means that you pay nothing toward the principal. If you borrow $10,000, getget copies copies of of your your credit credit reports reports (go (go to to the the CFPB’s CFPB’s website website at at consumerfinance. consumerfinance. (202)(202) 551-6551 551-6551 www.ftc.govwww.ftc.gov paymentpayment in in full full of of any any outstanding outstanding balance balance at at the the end end of of the the period. period. Others Others may may which means that you pay nothing toward the principal. If you borrow $10,000, splitsplit between between them. them. In In some some cases, cases, the the money money needed needed to to pay pay points points can can be be you will owe that amount when the payment plan ends. gov/askcfpb/5/can-i-review-my-credit-report.htmlgov/askcfpb/5/can-i-review-my-credit-report.html for for information information about about how how to to www.sec.govwww.sec.gov www.ftc.gov/bcpwww.ftc.gov/bcp allowallow repayment repayment over over a afixed fixed period period (the (the “repayment “repayment period”), period”), for for example, example, 1010 you will owe that amount when the payment plan ends. borrowedborrowed (incorporated (incorporated in in the the loan loan amount), amount), but but doing doing so so will will increase increase the the loan loan Regardless of the minimum required payment on your home equity line, you getget free free copies copies of of your your credit credit reports) reports) to to make make sure sure all all the the information information in in them them www.sec.gov/complaint/select.shtmlwww.sec.gov/complaint/select.shtml Fair lending and fair housing issues years.years. Regardless of the minimum required payment on your home equity line, you amountamount and and the the total total costs. costs. Discount Discount points points (also (also called called discount discount fees) fees) are are Fair lending and fair housing issues maymay choose choose to to pay pay more, more, and and many many lenders lenders offer offer a achoice choice of of payment payment options. options. isis correct. correct. If Ifyour your lender lender suggests suggests getting getting a anew new appraisal, appraisal, be be sure sure you you discuss discuss AgriculturalAgricultural Lenders Lenders USUS Department Department of of Justice Justice (DOJ) (DOJ) OnceOnce approved approved for for a ahome home equity equity line line of of credit, credit, you you will will most most likely likely be be able able to to appraisalappraisal firms firms in in advance advance so so that that you you know know they they willwill accept accept the the new new appraisal appraisal pointspoints that that you you voluntarily voluntarily choose choose to to pay pay in in return return for for a alower lower interest interest rate. rate. borrowborrow up up to to your your credit credit limit limit whenever whenever you you want. want. Typically, Typically, you you will will use use special special ManyMany consumers consumers choose choose to to pay pay down down the the principal principal regularly regularly as as they they do do with with FarmFarm Credit Credit Administration Administration CivilCivil Rights Rights Division Division asas valid. valid. SecuritySecurity interest interest - -If Ifstated stated in in your your credit credit agreement, agreement, a acreditor’s, creditor’s, lessor’s, lessor’s, or or checkschecks to to draw draw on on your your line. line. Under Under some some plans, plans, borrowers borrowers can can use use a acredit credit card card otherother loans. loans. For For example, example, if ifyou you use use your your line line to to buy buy a aboat, boat, you you may may want want to to pay pay OfficeOffice of of CongressionalCongressional and and PublicPublic AffairsAffairs 950950 Pennsylvania Pennsylvania Avenue, Avenue, N.W. 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McLean,McLean, VA VA 22102 22102 Washington,Washington, DC DC 20530 20530 ThereThere may may be be other other limitations limitations on on how how you you use use the the line. line. Some Some plans plans may may YouYou may may be be able able to to pay pay off off your your original original line line of of credit credit and and take take out out another another one. one. requirerequire you you to to borrow borrow a aminimum minimum amount amount each each time time you you draw draw on on the the line line (for (for youyou pay pay some, some, a alittle, little, or or none none of of the the principal principal amount amount of of the the loan—when loan—when the the TransactionTransaction fee fee - -Fee Fee charged charged each each time time a awithdrawal withdrawal or or other other specified specified (703)883-4056(703)883-4056 (202)514-4713(202)514-4713 planplan ends, ends, you you may may have have to to pay pay the the entire entire balance balance owed, owed, all all at at once. once. You You must must KeepKeep in in mind, mind, however, however, that that you you may may need need to to pay pay some some of of the the same same application application transactiontransaction is is made made on on a aline line of of credit, credit, such such as as a abalance balance transfer transfer fee fee or or a acash cash www.fca.govwww.fca.gov TTY–(202)TTY–(202) 305-1882 305-1882 FAX–(202) FAX–(202) 514-1116 514-1116 example,example, $300) $300) or or keep keep a aminimum minimum amount amount outstanding. outstanding. Some Some plans plans may may also also feesfees you you paid paid for for your your original original line line of of credit. credit. requirerequire that that you you take take an an initial initial advance advance when when the the line line is is set set up. up. bebe prepared prepared to to make make this this “balloon “balloon payment” payment” by by refinancing refinancing it it withwith the the lender, lender, by by advanceadvance fee. fee. SmallSmall business business lenders lenders ToTo report report an an incident incident of of housing housing discrimination: discrimination: 1-800-896-7743 1-800-896-7743 [email protected] obtainingobtaining a aloan loan from from another another lender, lender, or or by by some some other other means. means. If Ifyou you are are unable unable DefinedDefined Terms Terms VariableVariable rate rate - -An An interest interest rate rate that that changes changes periodically periodically in in relation relation to to an an index, index, SmallSmall Business Business Administration Administration (SBA) (SBA) [email protected] WhatWhat should should you you look look for for when when shopping shopping for for a a plan? plan? toto make make the the balloon balloon payment, payment, you you could could lose lose your your home. home. ThisThis glossary glossary provides provides general general definitions definitions for for terms terms commonly commonly used used in in the the If Ifyou you decide decide to to apply apply for for a ahome home equity equity line line of of credit, credit, look look for for the the plan plan that that best best suchsuch as as the the prime prime rate. rate. Payments Payments may may increase increase or or decrease decrease accordingly. accordingly. ConsumerConsumer Affairs Affairs FairFair lending lending and and fair fair housing housing issues issues If Ifyour your plan plan has has a avariable variable interest interest rate, rate, your your monthly monthly payments payments may may change. change. realreal estate estate market. market. They They may may have have different different legal legal meanings meanings depending depending on on the the Department of Housing and Urban Development (HUD) meetsmeets your your particular particular needs. needs. Read Read the the credit credit agreement agreement carefully, carefully, and and examine examine MoreMore information information 409409 3rd 3rd Street, Street, S.W. S.W. Department of Housing and Urban Development (HUD) Assume,Assume, for for example, example, that that you you borrow borrow $10,000 $10,000 under under a aplan plan that that calls calls for for context.context. Washington,Washington, DC DC 20416 20416 OfficeOffice of of Fair Fair HousingHousing / /Equal Equal OpportunityOpportunity thethe terms terms and and conditions conditions of of various various plans, plans, including including the the annual annual percentage percentage rate rate interest-onlyinterest-only payments. payments. At At a a10%interest 10%interest rate, rate, your your monthly monthly payments payments would would ForFor more more information information about about mortgages, mortgages, including including home home equity equity lines lines of of (APR)(APR) and and the the costs costs of of establishing establishing the the plan. plan. Remember, Remember, though, though, that that the the APR APR AnnualAnnual membership membership or or maintenance maintenance fee fee - -An An annual annual charge charge for for access access to to credit,credit, visit visit consumerfinance.gov/mortgage. consumerfinance.gov/mortgage. For For answers answers to to questions questions about about (800)U-ASK-SBA(800)U-ASK-SBA or or (800)827-5722 (800)827-5722 451451 7th 7th Street, Street, S.W. S.W. bebe $83. $83. If Ifthe the rate rate rises rises over over time time to to 15%, 15%, your your monthly monthly payments payments will will increase increase a afinancial financial product product such such as as a linea line of of credit, credit, credit credit card, card, or or account. account. The The fee fee is is www.sba.govwww.sba.gov Washington,Washington, DC DC 20410 20410 forfor a ahome home equity equity line line is is based based on on the the interest interest rate rate alone alone and and will will not not reflect reflect toto $125. $125. Similarly, Similarly, if ifyou you are are making making payments payments that that cover cover interest interest plus plus some some mortgagesmortgages and and other other financial financial topics, topics, visit visit consumerfinance.gov/askcfpb. consumerfinance.gov/askcfpb. You You closingclosing costs costs and and other other fees fees and and charges, charges, so so you’ll you’ll need need to to compare compare these these chargedcharged regardless regardless of of whether whether or or not not the the product product is is used. used. maymay also also visit visit the the CFPB’s CFPB’s website website at at consumerfinance.gov/owning-a-home consumerfinance.gov/owning-a-home CommodityCommodity brokers, brokers, commodity commodity trading trading advisers, advisers, commodity commodity pools pools (800)669-9777(800)669-9777 portionportion of of the the principal, principal, your your monthly monthly payments payments may may increase, increase, unless unless your your www.hud.gov/complaintswww.hud.gov/complaints costs,costs, as as well well as as the the APRs, APRs, among among lenders. lenders. agreementagreement calls calls for for keeping keeping payments payments the the same same throughout throughout the the plan plan period. period. AnnualAnnual percentage percentage rate rate (APR) (APR) - -The The cost cost of of credit, credit, expressed expressed as as a ayearly yearly toto access access interactive interactive tools tools and and resources resources for for mortgage mortgage shoppers, shoppers, which which are are andand introducing introducing brokers brokers VariableVariable interest interest rates rates If Ifyou you sell sell your your home, home, you you will will probably probably be be required required to to pay pay off off your your home home equity equity rate.rate. For For closed-end closed-end credit, credit, such such as as car car loans loans or or mortgages, mortgages, the the APR APR includes includes expectedexpected to to be be available available beginning beginning in in 2014. 2014. CommodityCommodity Futures Futures Trading Trading Commission Commission (CFTC) (CFTC) HomeHome equity equity lines lines of of credit credit typically typically involve involve variable variable rather rather than than fixed fixed interest interest lineline in in full full immediately. immediately. If Ifyou you are are likely likely to to sell sell your your home home in in the the near near future, future, thethe interest interest rate, rate, points, points, broker broker fees, fees, and and other other credit credit charges charges that that the the borrower borrower HousingHousing counselors counselors can can be be very very helpful, helpful, especially especially for for first-time first-time home home 11551155 21st 21st Street, Street, N.W. N.W. rates.rates. The The variable variable rate rate must must be be based based on on a apublicly publicly available available index index (such (such as as considerconsider whether whether it itmakes makes sense sense to to pay pay the the up-front up-front costs costs of of setting setting up up a aline line isis required required to to pay. pay. An An APR, APR, or or an an equivalent equivalent rate, rate, is is not not used used in in leasing leasing buyersbuyers or or if ifyou’re you’re having having trouble trouble paying paying your your mortgage. mortgage. The The U.S. U.S. Department Department of of Washington,Washington, DC DC 20581 20581 thethe prime prime rate rate published published in in some some major major daily daily newspapers newspapers or or a aU.S. U.S. Treasury Treasury bill bill ofof credit. credit. Also Also keep keep in in mind mind that that renting renting your your home home may may be be prohibited prohibited under under the the agreements.agreements. HousingHousing and and Urban Urban Development Development (HUD) (HUD) supports supports housing housing counseling counseling agencies agencies (866)(866) 366-2382 366-2382 rate).rate). In In such such cases, cases, the the interest interest rate rate you you pay pay for for the the line line of of credit credit will will change, change, termsterms of of your your agreement. agreement. throughoutthroughout the the country country that that can can provide provide free free or or low-cost low-cost advice. advice. You You can can search search cftc.gov/ConsumerProtection/index.htmcftc.gov/ConsumerProtection/index.htm ThisThis booklet booklet was was initially initially prepared prepared by by the the Board Board of of Governors Governors of of the the Federal Federal mirroringmirroring changes changes in in the the value value of of the the index. index. Most Most lenders lenders cite cite the the interest interest rate rate LinesLines of of credit credit vs. vs. traditional traditional second second mortgage mortgage loans. loans. ApplicationApplication fee fee - -Fees Fees charged charged when when you you apply apply for for a aloan loan or or other other credit. credit. forfor HUD-approved HUD-approved housing housing counseling counseling agencies agencies in in your your area area on on the the CFPB’s CFPB’s NationalNational banks banks and and federally federally chartered chartered savings savings banks/associations banks/associations ReserveReserve System. System. The The Consumer Consumer Financial Financial Protection Protection Bureau Bureau (CFPB) (CFPB) has has made made youyou will will pay pay as as the the value value of of the the index index at at a aparticular particular time, time, plus plus a a“margin,” “margin,” such such If Ifyou you are are thinking thinking about about a ahome home equity equity line line of of credit, credit, you you might might also also want want TheseThese fees fees may may include include charges charges for for property property appraisal appraisal and and a acredit credit report. report. webweb site site at at consumerfinance.gov/find-a-housing-counselor consumerfinance.gov/find-a-housing-counselor or or by by calling calling HUD’sHUD’s OfficeOffice of of the the ComptrollerComptroller of of the the CurrencyCurrency (OCC) (OCC) technicaltechnical updates updates to to the the booklet booklet to to reflect reflect new new mortgagemortgage rules rules under under Title Title XIV XIV of of asas 2 2 percentage percentage points. points. Because Because the the cost cost of of borrowing borrowing is is tied tied directly directly to to the the toto consider consider a atraditional traditional second second mortgage mortgage loan. loan. This This type type of of loan loan provides provides you you BalloonBalloon payment payment - -A A large large extra extra payment payment that that may may be be charged charged at at the the end end of of interactiveinteractive toll-free toll-free number number at at 800-569-4287. 800-569-4287. CustomerCustomer Assistance Assistance Unit Unit thethe Dodd-Frank Dodd-Frank Wall Wall Street Street Reform Reform and and Consumer Consumer Protection Protection Act Act (Dodd-Frank (Dodd-Frank valuevalue of of the the index, index, it itis is important important to to find find out out whichwhich index index is is used, used, how how often often withwith a afixed fixed amount amount of of money,money, repayable repayable over over a afixed fixed period. period. In In most most cases, cases, the the a amortgage mortgage loan loan or or lease. lease. TheThe company company that that collects collects your your mortgage mortgage payments payments is is your your loan loan servicer. servicer. 13011301 McKinney McKinney Street, Street, Suite Suite 3450 3450 Act).Act). A A larger larger update update of of this this booklet booklet is is planned planned in in the the future future to to reflect reflect other other thethe value value of of the the index index changes, changes, and and how how high high it ithas has risen risen in in the the past. past. It Itis is also also paymentpayment schedule schedule calls calls for for equal equal payments payments that that pay pay off off the the entire entire loan loan within within ThisThis may may not not be be the the same same company company as as your your lender. lender. If Ifyou you have have concerns concerns about about Houston,Houston, TX TX 77010 77010 changeschanges under under the the Dodd-Frank Dodd-Frank Act Act and and to to align align with with other other CFPB CFPB resources resources importantimportant to to note note the the amount amount of of the the margin. margin. thethe loan loan period. period. You You might might consider consider a asecond second mortgage mortgage instead instead of of a ahome home CapCap (interest (interest rate) rate) - -A A limit limit on on the the amount amount that that your your interest interest rate rate can can howhow your your loan loan is is being being serviced serviced or or another another aspect aspect of of your your mortgage, mortgage, you you may may (800)(800) 613-6743 613-6743 andand tools tools for for consumers consumers as as part part of of the the CFPB’s CFPB’s broader broader mission mission to to educate educate LendersLenders sometimes sometimes offer offer a atemporarily temporarily discounted discounted interest interest rate rate for for home home equityequity line line if, if, for for example, example, you you need need a aset set amount amount for for a aspecific specific purpose, purpose, such such increase.increase. Two Two types types of of interest-rate interest-rate caps caps exist. exist. Periodic Periodic adjustment adjustment caps caps limit limit wishwish to to submit submit a acomplaint complaint to to the the CFPB CFPB at at consumerfinance.gov/complaint consumerfinance.gov/complaint or or www.occ.treas.govwww.occ.treas.gov consumers.consumers. equityequity lines—an lines—an “introductory” “introductory” rate rate that that is is unusually unusually low low for for a ashort short period, period, asas an an addition addition to to your your home. home. thethe interest-rate interest-rate increase increase from from one one adjustment adjustment period period to to the the next. next. Lifetime Lifetime caps caps byby calling calling (855) (855) 411-CFPB 411-CFPB (2372). (2372). www.helpwithmybank.govwww.helpwithmybank.gov ConsumersConsumers areare encouragedencouraged toto visitvisit thethe CPFB’sCPFB’s websitewebsite atat suchsuch as as 6 6 months. months. InIn deciding deciding which which type type of of loan loan best best suits suits your your needs, needs, consider consider the the costs costs limitlimit the the interest-rate interest-rate increase increase over over the the life life of of the the loan. loan. By By law, law, all all adjustable- adjustable- WhenWhen you you submit submit a acomplaint complaint to to the the CFPB, CFPB, the the CFPB CFPB will will forward forward your your raterate mortgages mortgages have have an an overall overall cap. cap. FederallyFederally insured insured state state chartered chartered banks banks that that are are not not members members of of the the consumerfinance.gov/owning-a-homeconsumerfinance.gov/owning-a-home to to access access interactive interactive tools tools and and resources resources Variable-rateVariable-rate plans plans secured secured by by a adwelling dwelling must, must, by by law, law, have have a aceiling ceiling (or (or underunder the the two two alternatives. alternatives. Look Look at at both both the the APR APR and and other other charges. charges. Do Do not, not, complaintcomplaint to to the the company company and and work work to to get get a aresponse. response. Companies Companies have have 15 15 FederalFederal Reserve Reserve System System - Fees paid when you close (or settle) on a loan. forfor mortgage mortgage shoppers, shoppers, which which are are expected expected to to be be available available beginning beginning in in 2014. 2014. cap)cap) on on how how much much your your interest interest rate rate may may increase increase over over the the life life of of the the plan. plan. however,however, simply simply compare compare the the APRs, APRs, because because the the APRs APRs on on the the two two types types of of loans loans ClosingClosing or or settlement settlement costs costs - Fees paid when you close (or settle) on a loan. daysdays to to respond respond to to you you and and the the CFPB. CFPB. You You can can review review the the company’s company’s response response FederalFederal Deposit Deposit Insurance Insurance Corporation Corporation (FDIC) (FDIC) These fees may include application fees, title examination, abstract of title, title SomeSome variable-rate variable-rate plans plans limit limit how how much much your your payment payment may may increase increase and and how how areare figured figured differently: differently: These fees may include application fees, title examination, abstract of title, title andand give give feedback feedback to to the the CFPB. CFPB. ConsumerConsumer Response Response Center Center WhenWhen Your Your Home Home Is Is on on the the Line: Line: insurance, and property survey fees; fees for preparing deeds, mortgages, and lowlow your your interest interest rate rate may may fall fall if ifthe the index index drops. drops. TheThe APR APR for for a atraditional traditional second second mortgage mortgage loan loan takes takes into into account account the the insurance, and property survey fees; fees for preparing deeds, mortgages, and ContactContact Information Information 11001100 Walnut Walnut Street, Street, Box#11 Box#11 WhatWhat You You Should Should Know Know About About Home Home Equity Equity Lines Lines of of Credit Credit settlement documents; attorneys’ fees; recording fees; estimated costs of taxes SomeSome lenders lenders allow allow you you to to convert convert from from a avariable variable interest interest rate rate to to a afixed fixed rate rate interestinterest rate rate charged charged plus plus points points and and other other finance finance charges. charges. settlement documents; attorneys’ fees; recording fees; estimated costs of taxes ForFor additional additional information information or or to to submit submit a acomplaint, complaint, you you can can contact contact the the KansasKansas City, City, MO MO 64106 64106 If Ifyou you are are in in the the market market for for credit, credit, a ahome home equity equity plan plan is is one one of of several several and insurance; and notary, appraisal, and credit report fees. Under the Real duringduring the the life life of of the the plan, plan, or or let let you you convert convert all all or or a aportion portion of of your your line line to to a a TheThe APR APR for for a ahome home equity equity line line of of credit credit is is based based on on the the periodic periodic interest interest rate rate and insurance; and notary, appraisal, and credit report fees. Under the Real CFPBCFPB or or one one of of the the other other federal federal agencies agencies listed listed below, below, depending depending on on the the type type (877)(877) ASK-FDIC ASK-FDIC or or (877)275-3342 (877)275-3342 optionsoptions that that might might be be right right for for you. you. Before Before making making a adecision, decision, however, however, you you Estate Settlement Procedures Act, the borrower receives a good faith estimate fixed-termfixed-term installment installment loan. loan. alone.alone. It Itdoes does not not include include points points or or other other charges. charges. Estate Settlement Procedures Act, the borrower receives a good faith estimate ofof institution. institution. If Ifyou you are are not not sure sure which which agency agency to to contact, contact, you you can can submit submit a a www.fdic.govwww.fdic.gov shouldshould weigh weigh carefully carefully the the costs costs of of a ahome home equity equity line line against against the the benefits. benefits. ShopShop of closing costs within three days of application. The good faith estimate lists CostsCosts of of establishing establishing and and maintaining maintaining a a home home equity equity line. line. DisclosuresDisclosures from from lenders lenders of closing costs within three days of application. The good faith estimate lists complaintcomplaint to to the the CFPB CFPB and and if ifthe the CFPB CFPB determines determines that that another another agency agency would would www.fdic.gov/consumerswww.fdic.gov/consumers forfor the the credit credit terms terms that that best best meet meet your your borrowing borrowing needs needs without without posing posing undue undue TheThe federal federal Truth Truth in in Lending Lending Act Act requires requires lenders lenders to to disclose disclose the the important important eacheach expected expected cost cost as as an an amount amount or or a arange. range. financialfinancial risks. risks. AndAnd remember, remember, failure failure to to repay repay the the amounts amounts you’ve you’ve borrowed, borrowed, ManyMany of of the the costs costs of of setting setting up up a ahome home equity equity line line of of credit credit are are similar similar to to bebe better better able able to to assist assist you, you, the the CFPB CFPB will will refer refer your your complaint complaint to to that that agency agency FannieFannie Mae, Mae, Freddie Freddie Mac, Mac, and and the the Federal Federal Home Home Loan Loan Banks Banks termsterms and and costs costs of of their their home home equity equity plans, plans, including including the the APR, APR, miscellaneous miscellaneous Credit limit - The maximum amount that may be borrowed on a credit card or plusplus interest, interest, could could mean mean the the loss loss of of your your home. home. thosethose you you pay pay when when you you get get a amortgage. mortgage. For For example: example: Credit limit - The maximum amount that may be borrowed on a credit card or andand let let you you know. know. FederalFederal Housing Housing Finance Finance Agency Agency (FHFA) (FHFA) charges,charges, the the payment payment terms, terms, and and information information about about any any variable-rate variable-rate feature. feature. under a home equity line of credit plan. AA fee fee for for a aproperty property appraisal appraisal to to estimate estimate the the value value of of your your home; home; under a home equity line of credit plan. InsuredInsured depositorydepository institutionsinstitutions andand creditcredit unionsunions withwith assetsassets ConsumerConsumer Communications Communications WhatWhat is is a a home home equity equity line line of of credit? credit? AnAn application application fee, fee, which which may may not not be be refunded refunded if ifyou you are are turned turned down down for for credit; credit; AndAnd in in general, general, neither neither the the lender lender nor nor anyone anyone else else may may charge charge a afee fee until until after after AA home home equity equity line line of of credit credit is is a aform form of of revolving revolving credit credit in in which which your your home home EquityEquity - -The The difference difference between between the the fair fair market market value value of of the the home home and and the the greatergreater than than $10 $10 billion billion (and (and their their affiliates), affiliates), andand non-banknon-bank providersproviders ConstitutionConstitution Center Center Up-frontUp-front charges, charges, such such as as one one or or more more “points” “points” (one (one point point equals equals 1 1 percent percent of of youyou have have received received this this information. information. You You usually usually get get these these disclosures disclosures when when you you servesserves as as collateral. collateral. Because Because a ahome home often often is is a aconsumer’s consumer’s most most valuable valuable outstandingoutstanding balance balance on on your your mortgage mortgage plus plus any any outstanding outstanding home home equity equity loans. loans. ofof consumer consumer financial financial productsproducts andand services, services, including including mortgages,mortgages, 400400 7th 7th Street, Street, S.W. S.W. thethe credit credit limit); limit); and and receivereceive an an application application form, form, and and you you will will get get additional additional disclosures disclosures before before the the asset,asset, many many homeowners homeowners use use home home equity equity credit credit lines lines only only for for major major items, items, Index - The economic indicator used to calculate interest-rate adjustments for creditcredit cards, cards, debt debt collection, collection, consumer consumer reports, reports, prepaid prepaid cards, cards, private private Washington,Washington, DC DC 20024 20024 ClosingClosing costs, costs, including including fees fees for for attorneys, attorneys, title title search, search, mortgage mortgage preparation preparation planplan is is opened. opened. If Ifany any term term (other (other than than a avariable-rate variable-rate feature) feature) changes changes before before Index - The economic indicator used to calculate interest-rate adjustments for suchsuch as as education, education, home home improvements, improvements, or or medical medical bills, bills, and and choose choose not not to to use use adjustable-rate mortgages or other adjustable-rate loans. The index rate can educationeducation loans, loans, and and payday payday lending. lending. ConsumerConsumer Helpline Helpline andand filing, filing, property property and and title title insurance, insurance, and and taxes. taxes. thethe plan plan is is opened, opened, the the lender lender must must return return all all fees fees if ifyou you decide decide not not to to enter enter into into adjustable-rate mortgages or other adjustable-rate loans. The index rate can themthem for for day-to-day day-to-day expenses. expenses. increase or decrease at any time. See also Selected index rates for ARMs over ConsumerConsumer Financial Financial Protection Protection Bureau Bureau (CFPB) (CFPB) (202)(202) 649-3811 649-3811 InIn addition, addition, you you may may be be subject subject to to certain certain fees fees during during the the plan plan period, period, such such as as thethe plan plan because because of of the the change. change. increase or decrease at any time. See also Selected index rates for ARMs over WithWith a ahome home equity equity line, line, you you will will be be approved approved for for a aspecific specific amount amount of ofcredit. credit. an 11-year period (consumerfinance.gov/f/201204_CFPB_ARMs-brochure. P.O.P.O. Box Box 2900 2900 www.fhfa.govwww.fhfa.gov annualannual membership membership or or maintenance maintenance fees fees and and a atransaction transaction fee fee every every time time you you WhenWhen you you open open a ahome home equity equity line, line, the the transaction transaction puts puts your your home home at at risk. risk. If If an 11-year period (consumerfinance.gov/f/201204_CFPB_ARMs-brochure. ManyMany lenders lenders set set the the credit credit limit limit on on a ahome home equity equity line line by by taking taking a apercentage percentage thethe home home involved involved is is your your principal principal dwelling, dwelling, the the Truth Truth in in Lending Lending Act Act gives gives you you pdf)pdf) for for examples examples of of common common indexes indexes that that have have changed changed in in the the past. past. Clinton,Clinton, IA IA 52733 52733 www.fhfa.gov/Default.aspx?page=369www.fhfa.gov/Default.aspx?page=369 drawdraw on on the the credit credit line.. line.. (855)(855) 411-2372 411-2372 [email protected]@fhfa.gov (say,(say, 75%) 75%) of of the the home’s home’s appraised appraised value value and and subtracting subtracting from from that that the the balance balance 33 days days from from the the day day the the account account was was opened opened to to cancel cancel the the credit credit line. line. This This right right InterestInterest rate rate - -The The percentage percentage rate rate used used to to determine determine the the cost cost of of borrowing borrowing YouYou could could find find yourself yourself paying paying hundreds hundreds of ofdollars dollars to to establish establish the the plan. plan. AndAnd www.consumerfinance.govwww.consumerfinance.gov owedowed on on the the existing existing mortgage. mortgage. For For example: example: allowsallows you you to to change change your your mind mind for for any any reason. reason. You You simply simply inform inform the the lender lender in in money,money, stated stated usually usually as as a apercentage percentage of of the the principal principal loan loan amount amount and and as as an an FederallyFederally chartered chartered credit credit unions unions if ifyou you were were to to draw draw only only a asmall small amount amount against against your your credit credit line, line, those those initial initial www.consumerfinance.gov/complaintwww.consumerfinance.gov/complaint AppraisedAppraised value value of of home home $100,000$100,000 chargescharges would would substantially substantially increase increase the the cost cost of of the the funds funds borrowed. borrowed. On On the the writingwriting within within the the 3-day 3-day period. period. The The lender lender must must then then cancel cancel its its security security interest interest annualannual rate. rate. NationalNational Credit Credit Union Union Adminstration Adminstration (NCUA) (NCUA) inin your your home home and and return return all all fees— fees— including including any any application application and and appraisal appraisal ConsumerConsumer Assistance Assistance PercentagePercentage x x75% 75% otherother hand, hand, because because the the lender’s lender’s risk risk is is lower lower than than for for other other forms forms of of credit, credit, as as MarginMargin - -The The number number of of percentage percentage points points the the lender lender adds adds to to the the index index rate rate to to FederallyFederally InsuredInsured state-charteredstate-chartered bankbank membersmembers ofof thethe FederalFederal youryour home home serves serves as as collateral, collateral, annual annual percentage percentage rates rates for for home home equity equity lines lines fees—paidfees—paid to to open open the the account. account. ReserveReserve System System 17751775 Duke Duke Street Street • • Alexandria, Alexandria, VA VA 22314 22314 PercentagePercentage of of appraised appraised value value == $75,000 $75,000 calculatecalculate the the ARM ARM interest interest rate rate at at each each adjustment. adjustment. areare generally generally lower lower than than rates rates for for other other types types of of credit. credit. The The interest interest you you save save WhatWhat if if the the lender lender freezes freezes or or reduces reduces your your line line of of credit?. credit?. BoardBoard of of Governors Governors of of the the Federal Federal Reserve Reserve System System (FRB) (FRB) (800)(800) 755-1030 755-1030 Minimum payment - -The The lowest lowest amount amount that that you you must must pay pay (usually (usually monthly) monthly) LessLess balance balance owed owed on on mortgage mortgage - -$40,000 $40,000 couldcould offset offset the the costs costs of of establishing establishing and and maintaining maintaining the the line. line. Moreover, Moreover, some some PlansPlans generally generally permit permit lenders lenders to to freeze freeze or or reduce reduce a acredit credit line line if ifthe the value value of of Minimum payment ConsumerConsumer Help Help www.ncua.govwww.ncua.gov toto keep keep your your account account in in good good standing. standing. Under Under some some plans, plans, the the minimum minimum lenderslenders waive waive some some or or all all of of the the closing closing costs. costs. thethe home home “declines “declines significantly” significantly” or, or, whenwhen the the lender lender “reasonably “reasonably believes” believes” that that POPO Box Box 1200 1200 • • Minneapolis, Minneapolis, MN MN 55480 55480 www.mycreditunion.govwww.mycreditunion.gov PotentialPotential line line of of credit credit $35,000$35,000 paymentpayment may may cover cover interest interest only; only; under under others, others, it itmay may include include both both principal principal youyou will will be be unable unable to to make make your your payments payments due due to to a a“material “material change” change” in in your your (888)(888) 851-1920 851-1920 FinanceFinance Companies, Companies, retail retail stores, stores, auto auto dealers, dealers, mortgage mortgage companies, companies, InIn determining determining your your actual actual credit credit limit, limit, the the lender lender will will also also consider consider your your HowHow will will you you repay repay your your home home equity equity plan? plan? andand interest. interest. www.federalreserveconsumerhelp.govwww.federalreserveconsumerhelp.gov BeforeBefore entering entering into into a aplan, plan, consider consider how how you you will will pay pay back back the the money money you you financialfinancial circumstances. circumstances. If If this this happens, happens, you you maymay wantwant to: to: andand other other lenders, lenders, and and credit credit bureaus bureaus abilityability to to repay repay the the loan loan (principal (principal and and interest) interest) by by looking looking at at your your income, income, debts, debts, PointsPoints (also (also called called discount discount points) points) - -One One point point is is equal equal to to 1 1 percent percent of of the the borrow.borrow. Some Some plans plans set set a aminimum minimum monthly monthly payment payment that that includes includes a aportion portion •• Talk Talk with with your your lender. lender. Find Find out out what what caused caused the the lender lender to to freeze freeze or or BrokerageBrokerage firms, firms, mutualmutual fund fund companies, companies, andand investment investment advisorsadvisors FederalFederal Trade Trade Commission Commission (FTC) (FTC) andand other other financial financial obligations obligations as as wellwell as as your your credit credit history. history. principalprincipal amount amount of of a amortgage mortgage loan. loan. For For example, example, if ifa amortgage mortgage is is $200,000, $200,000, ofof the the principal principal (the (the amount amount you you borrow) borrow) plus plus accrued accrued interest. interest. But, But, unlike unlike with with reducereduce your your credit credit line line and and what, what, if ifanything, anything, you you can can do do to to restore restore it. it. You You may may SecuritiesSecurities and and Exchange Exchange Commission Commission (SEC) (SEC) ConsumerConsumer Repsonse Repsonse Center Center ManyMany home home equity equity plans plans set set a afixed fixed period period during during whichwhich you you can can borrow borrow oneone point point equals equals $2,000. $2,000. Lenders Lenders frequently frequently charge charge points points in in both both fixed-rate fixed-rate typicaltypical installment installment loan loan agreements, agreements, the the portion portion of of your your payment payment that that goes goes bebe able able to to provide provide additional additional information information to to restore restore your your line line of of credit, credit, such such as as ComplaintComplaint Center Center 600600 Pennsylvania Pennsylvania Avenue, Avenue, N.W. N.W. money,money, such such as as 10 10 years. years. At At the the end end of of this this “draw “draw period,” period,” you you may may be be allowed allowed andand adjustable-rate adjustable-rate mortgages mortgages to to cover cover loan loan origination origination costs costs or or to to provide provide towardtoward principal principal may may not not be be enough enough to to repay repay the the principal principal by by the the end end of of the the documentationdocumentation showing showing that that your your house house has has retained retained its its value value or or that that there there has has 100100 F FStreet, Street, N.E. N.E. WashingtonWashington DC DC 20580 20580 toto renew renew the the credit credit line. line. If Ifyour your plan plan does does not not allow allow renewals, renewals, you you will will not not be be able able additionaladditional compensation compensation to to the the lender lender or or broker. broker. These These points points usually usually are are paid paid term.term. Other Other plans plans may may allow allow payment payment of of interest interest only only during during the the life life of of the the plan, plan, notnot been been a a“material “material change” change” in in your your financial financial circumstances. circumstances. You You maymay wantwant to to Washington,Washington, DC DC 20549 20549 (877)(877) FTC-HELP FTC-HELP or or (877-382-4357) (877-382-4357) toto borrow borrow additional additional money money once once the the period period has has ended. ended. Some Some plans plans may may call call for for atat closing closing and and may may be be paid paid by by the the borrower borrower or or the the home home seller, seller, or or may may be be whichwhich means means that that you you pay pay nothing nothing toward toward the the principal. principal. If Ifyou you borrow borrow $10,000, $10,000, getget copies copies of of your your credit credit reports reports (go (go to to the the CFPB’s CFPB’s website website at at consumerfinance. consumerfinance. (202)(202) 551-6551 551-6551 www.ftc.govwww.ftc.gov paymentpayment in in full full of of any any outstanding outstanding balance balance at at the the end end of of the the period. period. Others Others may may splitsplit between between them. them. 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McLean,McLean, VA VA 22102 22102 Washington,Washington, DC DC 20530 20530 ThereThere may may be be other other limitations limitations on on how how you you use use the the line. line. Some Some plans plans may may YouYou may may be be able able to to pay pay off off your your original original line line of of credit credit and and take take out out another another one. one. youyou pay pay some, some, a alittle, little, or or none none of of the the principal principal amount amount of of the the loan—when loan—when the the TransactionTransaction fee fee - -Fee Fee charged charged each each time time a awithdrawal withdrawal or or other other specified specified (703)883-4056(703)883-4056 (202)514-4713(202)514-4713 requirerequire you you to to borrow borrow a aminimum minimum amount amount each each time time you you draw draw on on the the line line (for (for KeepKeep in in mind, mind, however, however, that that you you may may need need to to pay pay some some of of the the same same application application planplan ends, ends, you you may may have have to to pay pay the the entire entire balance balance owed, owed, all all at at once. once. 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SmallSmall business business lenders lenders ToTo report report an an incident incident of of housing housing discrimination: discrimination: 1-800-896-7743 1-800-896-7743 obtainingobtaining a aloan loan from from another another lender, lender, or or by by some some other other means. means. If Ifyou you are are unable unable DefinedDefined Terms Terms VariableVariable rate rate - -An An interest interest rate rate that that changes changes periodically periodically in in relation relation to to an an index, index, SmallSmall Business Business Administration Administration (SBA) (SBA) [email protected]@usdoj.gov WhatWhat should should you you look look for for when when shopping shopping for for a a plan? plan? toto make make the the balloon balloon payment, payment, you you could could lose lose your your home. home. ThisThis glossary glossary provides provides general general definitions definitions for for terms terms commonly commonly used used in in the the If Ifyou you decide decide to to apply apply for for a ahome home equity equity line line of of credit, credit, look look for for the the plan plan that that best best suchsuch as as the the prime prime rate. rate. Payments Payments may may increase increase or or decrease decrease accordingly. accordingly. ConsumerConsumer Affairs Affairs FairFair lending lending and and fair fair housing housing issues issues If Ifyour your plan plan has has a avariable variable interest interest rate, rate, your your monthly monthly payments payments may may change. change. realreal estate estate market. market. They They may may have have different different legal legal meanings meanings depending depending on on the the 409409 3rd 3rd Street, Street, S.W. S.W. DepartmentDepartment of of Housing Housing and and Urban Urban Development Development (HUD) (HUD) meetsmeets your your particular particular needs. needs. Read Read the the credit credit agreement agreement carefully, carefully, and and examine examine Assume,Assume, for for example, example, that that you you borrow borrow $10,000 $10,000 under under a aplan plan that that calls calls for for context.context. MoreMore information information thethe terms terms and and conditions conditions of of various various plans, plans, including including the the annual annual percentage percentage rate rate ForFor more more information information about about mortgages, mortgages, including including home home equity equity lines lines of of Washington,Washington, DC DC 20416 20416 OfficeOffice of of Fair Fair HousingHousing / /Equal Equal OpportunityOpportunity interest-onlyinterest-only payments. payments. At At a a10%interest 10%interest rate, rate, your your monthly monthly payments payments would would AnnualAnnual membership membership or or maintenance maintenance fee fee - -An An annual annual charge charge for for access access to to (APR)(APR) and and the the costs costs of of establishing establishing the the plan. plan. Remember, Remember, though, though, that that the the APR APR credit,credit, visit visit consumerfinance.gov/mortgage. consumerfinance.gov/mortgage. For For answers answers to to questions questions about about (800)U-ASK-SBA(800)U-ASK-SBA or or (800)827-5722 (800)827-5722 451451 7th 7th Street, Street, S.W. S.W. bebe $83. $83. If Ifthe the rate rate rises rises over over time time to to 15%, 15%, your your monthly monthly payments payments will will increase increase a afinancial financial product product such such as as a linea line of of credit, credit, credit credit card, card, or or account. account. The The fee fee is is forfor a ahome home equity equity line line is is based based on on the the interest interest rate rate alone alone and and will will not not reflect reflect mortgagesmortgages and and other other financial financial topics, topics, visit visit consumerfinance.gov/askcfpb. consumerfinance.gov/askcfpb. You You www.sba.govwww.sba.gov Washington,Washington, DC DC 20410 20410 toto $125. $125. Similarly, Similarly, if ifyou you are are making making payments payments that that cover cover interest interest plus plus some some chargedcharged regardless regardless of of whether whether or or not not the the product product is is used. used. closingclosing costs costs and and other other fees fees and and charges, charges, so so you’ll you’ll need need to to compare compare these these maymay also also visit visit the the CFPB’s CFPB’s website website at at consumerfinance.gov/owning-a-home consumerfinance.gov/owning-a-home CommodityCommodity brokers, brokers, commodity commodity trading trading advisers, advisers, commodity commodity pools pools (800)669-9777(800)669-9777 portionportion of of the the principal, principal, your your monthly monthly payments payments may may increase, increase, unless unless your your www.hud.gov/complaintswww.hud.gov/complaints costs,costs, as as well well as as the the APRs, APRs, among among lenders. lenders. agreementagreement calls calls for for keeping keeping payments payments the the same same throughout throughout the the plan plan period. period. AnnualAnnual percentage percentage rate rate (APR) (APR) - -The The cost cost of of credit, credit, expressed expressed as as a ayearly yearly toto access access interactive interactive tools tools and and resources resources for for mortgage mortgage shoppers, shoppers, which which are are andand introducing introducing brokers brokers VariableVariable interest interest rates rates If Ifyou you sell sell your your home, home, you you will will probably probably be be required required to to pay pay off off your your home home equity equity rate.rate. For For closed-end closed-end credit, credit, such such as as car car loans loans or or mortgages, mortgages, the the APR APR includes includes expectedexpected to to be be available available beginning beginning in in 2014. 2014. CommodityCommodity Futures Futures Trading Trading Commission Commission (CFTC) (CFTC) HomeHome equity equity lines lines of of credit credit typically typically involve involve variable variable rather rather than than fixed fixed interest interest lineline in in full full immediately. immediately. If Ifyou you are are likely likely to to sell sell your your home home in in the the near near future, future, thethe interest interest rate, rate, points, points, broker broker fees, fees, and and other other credit credit charges charges that that the the borrower borrower HousingHousing counselors counselors can can be be very very helpful, helpful, especially especially for for first-time first-time home home 11551155 21st 21st Street, Street, N.W. N.W. rates.rates. The The variable variable rate rate must must be be based based on on a apublicly publicly available available index index (such (such as as considerconsider whether whether it itmakes makes sense sense to to pay pay the the up-front up-front costs costs of of setting setting up up a aline line isis required required to to pay. pay. An An APR, APR, or or an an equivalent equivalent rate, rate, is is not not used used in in leasing leasing buyersbuyers or or if ifyou’re you’re having having trouble trouble paying paying your your mortgage. mortgage. The The U.S. U.S. Department Department of of Washington,Washington, DC DC 20581 20581 thethe prime prime rate rate published published in in some some major major daily daily newspapers newspapers or or a aU.S. U.S. Treasury Treasury bill bill ofof credit. credit. Also Also keep keep in in mind mind that that renting renting your your home home may may be be prohibited prohibited under under the the agreements.agreements. HousingHousing and and Urban Urban Development Development (HUD) (HUD) supports supports housing housing counseling counseling agencies agencies (866)(866) 366-2382 366-2382 rate).rate). In In such such cases, cases, the the interest interest rate rate you you pay pay for for the the line line of of credit credit will will change, change, termsterms of of your your agreement. agreement. throughoutthroughout the the country country that that can can provide provide free free or or low-cost low-cost advice. advice. You You can can search search cftc.gov/ConsumerProtection/index.htmcftc.gov/ConsumerProtection/index.htm This booklet was initially prepared by the Board of Governors of the Federal mirroring changes in the value of the index. Most lenders cite the interest rate Lines of credit vs. traditional second mortgage loans. Application fee - Fees charged when you apply for a loan or other credit. for HUD-approved housing counseling agencies in your area on the CFPB’s National banks and federally chartered savings banks/associations IMPORTANT TERMS OF OUR HOME EQUITY LINE OF CREDIT Property Insurance – You must carry insurance on the property that Check List RE- MARCH MARGIN *ANNUAL MINIMUM Reserve System. The Consumer Financial Protection Bureau (CFPB) has made you will pay as the value of the index at a particular time, plus a “margin,” such If you are thinking about a home equity line of credit, you might also want These fees may include charges for property appraisal and a credit report. web site at consumerfinance.gov/find-a-housing-counselor or by calling HUD’s Office of the Comptroller of the Currency (OCC) secures this line of credit. PERCENTAGE technical updates to the booklet to reflect new mortgage rules under Title XIV of as 2 percentage points. Because the cost of borrowing is tied directly to the to consider a traditional second mortgage loan. This type of loan provides you interactive toll-free number at 800-569-4287. Customer Assistance Unit Ask your lender to help fill out this check list. This disclosure contains important information about our Home Equity Line of YEAR PAYMENT INDEX This is a margin MONTHLY Balloon payment - A large extra payment that may be charged at the end of Minimum Draw Requirements – None. STARTS MONTH we have used RATE PAYMENT the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank value of the index, it is important to find out which index is used, how often with a fixed amount of money, repayable over a fixed period. In most cases, the a mortgage loan or lease. The company that collects your mortgage payments is your loan servicer. 1301 McKinney Street, Suite 3450 PLAN PLAN Credit. You should read it carefully and keep a copy for your records. recently Rounded, if appli. Act). A larger update of this booklet is planned in the future to reflect other the value of the index changes, and how high it has risen in the past. It is also payment schedule calls for equal payments that pay off the entire loan within This may not be the same company as your lender. If you have concerns about Houston, TX 77010 Tax Deductibility – You should consult a tax advisor regarding the Basic Features A B 2007 8.25% 0.00 8.25% 100.00*** changes under the Dodd-Frank Act and to align with other CFPB resources important to note the amount of the margin. the loan period. You might consider a second mortgage instead of a home Cap (interest rate) - A limit on the amount that your interest rate can how your loan is being serviced or another aspect of your mortgage, you may (800) 613-6743 Availability of Terms – All of the terms disclosed below are subject to change. □ increase. Two types of interest-rate caps exist. Periodic adjustment caps limit deductibility of interest and charges for the line. and tools for consumers as part of the CFPB’s broader mission to educate Lenders sometimes offer a temporarily discounted interest rate for home equity line if, for example, you need a set amount for a specific purpose, such wish to submit a complaint to the CFPB at consumerfinance.gov/complaint or www.occ.treas.gov If these terms change (other than the annual percentage rate) and you decide, 2008 □ 5.25% 0.00 5.25% 100.00*** the interest-rate increase from one adjustment period to the next. Lifetime caps Fixed annual percentage rate ...... % % Variable Rate Information – The line has a variable-rate feature, consumers. equity lines—an “introductory” rate that is unusually low for a short period, as an addition to your home. by calling (855) 411-CFPB (2372). www.helpwithmybank.gov as a result, not to enter into an agreement with us, you are entitled to a refund of limit the interest-rate increase over the life of the loan. By law, all adjustable- and the annual percentage rate (corresponding to the periodic rate) and the 2009 □ 3.25% 0.00 3.25% 100.00*** Consumers are encouraged to visit the CPFB’s website at such as 6 months. In deciding which type of loan best suits your needs, consider the costs When you submit a complaint to the CFPB, the CFPB will forward your Federally insured state chartered banks that are not members of the rate mortgages have an overall cap. % % any fees that you have paid to us or anyone else in connection with your application. 2010 □ 3.25% 0.00 3.25% 100.00*** consumerfinance.gov/owning-a-home to access interactive tools and resources Variable-rate plans secured by a dwelling must, by law, have a ceiling (or under the two alternatives. Look at both the APR and other charges. Do not, complaint to the company and work to get a response. Companies have 15 Federal Reserve System Variable annual percentage rate ...... minimum payment can change as a result. - Fees paid when you close (or settle) on a loan. for mortgage shoppers, which are expected to be available beginning in 2014. cap) on how much your interest rate may increase over the life of the plan. however, simply compare the APRs, because the APRs on the two types of loans Closing or settlement costs days to respond to you and the CFPB. You can review the company’s response Federal Deposit Insurance Corporation (FDIC) Security Interest – We will take a mortgage on your home. You could 2011 □ 3.25% 0.00 3.25% 100.00*** These fees may include application fees, title examination, abstract of title, title The annual percentage rate includes only interest and no other costs. Equity Some variable-rate plans limit how much your payment may increase and how are figured differently: and give feedback to the CFPB. Consumer Response Center • Index used and current value ...... % % lose your home if you do not meet the obligations in your agreement with us. When Your Home Is on the Line: low your interest rate may fall if the index drops. The APR for a traditional second mortgage loan takes into account the insurance, and property survey fees; fees for preparing deeds, mortgages, and The annual percentage rate is based on the value of an index. The index is 2012 □ 3.25% 0.00 3.25% 100.00*** What You Should Know About Home Equity Lines of Credit Contact Information 1100 Walnut Street, Box#11 Possible Actions – Under certain circumstances, we can (1) terminate Some lenders allow you to convert from a variable interest rate to a fixed rate interest rate charged plus points and other finance charges. settlement documents; attorneys’ fees; recording fees; estimated costs of taxes the Prime Rate published in the Money Rates section of The Wall Street Journal 2013 □ 3.25% 0.00 3.25% 100.00*** If you are in the market for credit, a home equity plan is one of several For additional information or to submit a complaint, you can contact the Kansas City, MO 64106 during the life of the plan, or let you convert all or a portion of your line to a The APR for a home equity line of credit is based on the periodic interest rate and insurance; and notary, appraisal, and credit report fees. Under the Real • Amount of margin ...... your line, require you to pay us the entire outstanding balance in one payment, options that might be right for you. Before making a decision, however, you CFPB or one of the other federal agencies listed below, depending on the type (877) ASK-FDIC or (877)275-3342 (if more than one Prime Rate is published, the higher rate shall be used), as most 2014 □ 3.25% 0.00 3.25% 100.00*** fixed-term installment loan. alone. It does not include points or other charges. Estate Settlement Procedures Act, the borrower receives a good faith estimate and charge you certain fees; (2) refuse to make additional extensions of credit; of institution. If you are not sure which agency to contact, you can submit a www.fdic.gov recently published on the last business day of the prior monthly billing cycle. should weigh carefully the costs of a home equity line against the benefits. Shop Disclosures from lenders of closing costs within three days of application. The good faith estimate lists 2015 □ 3.25% 0.00 3.25% 100.00*** for the credit terms that best meet your borrowing needs without posing undue Costs of establishing and maintaining a home equity line. complaint to the CFPB and if the CFPB determines that another agency would www.fdic.gov/consumers • Frequency of rate adjustments ...... (3) reduce your credit limit and (4), as specified in the initial agreement, implement The federal Truth in Lending Act requires lenders to disclose the important each expected cost as an amount or a range. Rate Floor – The minimum ANNUAL PERCENTAGE RATE will be 3.0%. 2016 3.50% 0.00 3.50% 100.00*** financial risks. And remember, failure to repay the amounts you’ve borrowed, Many of the costs of setting up a home equity line of credit are similar to be better able to assist you, the CFPB will refer your complaint to that agency Fannie Mae, Freddie Mac, and the Federal Home Loan Banks certain changes in the plan. □ terms and costs of their home equity plans, including the APR, miscellaneous Credit limit - The maximum amount that may be borrowed on a credit card or To determine the annual percentage rate, we apply a margin to the value of the index. plus interest, could mean the loss of your home. those you pay when you get a mortgage. For example: and let you know. Federal Housing Finance Agency (FHFA) • Amount/length of discount (if any) ...... 2017  4.00% 0.00 4.00% 100.00*** charges, the payment terms, and information about any variable-rate feature. under a home equity line of credit plan. If you ask, we will give you more specific information concerning when we A fee for a property appraisal to estimate the value of your home; Insured depository institutions and credit unions with assets Consumer Communications □ (If Checked) The initial annual percentage rate is a discounted rate or What is a home equity line of credit? An application fee, which may not be refunded if you are turned down for credit; And in general, neither the lender nor anyone else may charge a fee until after can take these actions. 2018 □ 4.75% 0.00 4.75% —0— A home equity line of credit is a form of revolving credit in which your home Equity - The difference between the fair market value of the home and the greater than $10 billion (and their affiliates), and non-bank providers Constitution Center • Interest rate cap and floor ...... a premium rate. It is not based on the index and margin used for later rate Up-front charges, such as one or more “points” (one point equals 1 percent of you have received this information. You usually get these disclosures when you – You can obtain advances of serves as collateral. Because a home often is a consumer’s most valuable outstanding balance on your mortgage plus any outstanding home equity loans. of consumer financial products and services, including mortgages, 400 7th Street, S.W. Minimum Payment Requirements 2019 □ 5.50% 0.00 5.50% —0— the credit limit); and receive an application form, and you will get additional disclosures before the adjustments. The initial rate will be in effect until the billing cycle beginning asset, many homeowners use home equity credit lines only for major items, Index - The economic indicator used to calculate interest-rate adjustments for credit cards, debt collection, consumer reports, prepaid cards, private Washington, DC 20024 Length of Plan credit for 10 (ten) years (the “draw period”). During the draw period, payments 2020 □ 3.25% 0.00 3.25% —0— Closing costs, including fees for attorneys, title search, mortgage preparation plan is opened. If any term (other than a variable-rate feature) changes before . such as education, home improvements, or medical bills, and choose not to use adjustable-rate mortgages or other adjustable-rate loans. The index rate can education loans, and payday lending. Consumer Helpline will be due monthly. Your minimum monthly payment will equal all accrued and filing, property and title insurance, and taxes. the plan is opened, the lender must return all fees if you decide not to enter into 2021 □ 3.25% 0.00 3.25% —0— them for day-to-day expenses. increase or decrease at any time. See also Selected index rates for ARMs over Consumer Financial Protection Bureau (CFPB) (202) 649-3811 Ask us for the current index value, margin, discount or premium if applicable In addition, you may be subject to certain fees during the plan period, such as the plan because of the change. Draw period ...... interest as of the closing date of the billing cycle, provided the payment shall With a home equity line, you will be approved for a specific amount of credit. When you open a home equity line, the transaction puts your home at risk. If an 11-year period (consumerfinance.gov/f/201204_CFPB_ARMs-brochure. P.O. Box 2900 www.fhfa.gov and annual percentage rate. After you open a credit line, rate information will annual membership or maintenance fees and a transaction fee every time you Clinton, IA 52733 not be less than $100.00, plus any amounts past due. Note: your minimum * The Annual Percentage Rate has been adjusted to reflect any applicable interest rate caps. Many lenders set the credit limit on a home equity line by taking a percentage the home involved is your principal dwelling, the Truth in Lending Act gives you pdf) for examples of common indexes that have changed in the past. www.fhfa.gov/Default.aspx?page=369 be provided on periodic statements that we send you. ** The Annual Percentage Rate reflects a discount we have used recently. draw on the credit line.. (855) 411-2372 Repayment period ...... monthly payment during the draw period may not reduce the amount of principal (say, 75%) of the home’s appraised value and subtracting from that the balance 3 days from the day the account was opened to cancel the credit line. This right - The percentage rate used to determine the cost of borrowing [email protected] *** Minimum Payment Amount. You could find yourself paying hundreds of dollars to establish the plan. And Interest rate www.consumerfinance.gov Rate Changes – The annual percentage rate can change at the beginning owed on the existing mortgage. For example: allows you to change your mind for any reason. You simply inform the lender in money, stated usually as a percentage of the principal loan amount and as an Federally chartered credit unions outstanding on this line of credit. if you were to draw only a small amount against your credit line, those initial www.consumerfinance.gov/complaint Initial fees of each monthly billing cycle. The maximum ANNUAL PERCENTAGE RATE that Appraised value of home $100,000 charges would substantially increase the cost of the funds borrowed. On the writing within the 3-day period. The lender must then cancel its security interest annual rate. National Credit Union Adminstration (NCUA) After the draw period ends, you will no longer be able to obtain credit advances in your home and return all fees— including any application and appraisal Federally Insured state-chartered bank members of the Federal can apply is 18.0%. Rate Floor – The minimum ANNUAL PERCENTAGE Percentage x 75% other hand, because the lender’s risk is lower than for other forms of credit, as Margin - The number of percentage points the lender adds to the index rate to Consumer Assistance and must pay the outstanding balance over 10 (ten) years (the “repayment your home serves as collateral, annual percentage rates for home equity lines fees—paid to open the account. Reserve System 1775 Duke Street • Alexandria, VA 22314 Appraisal fee ...... RATE will be 3.0%. Percentage of appraised value = $75,000 calculate the ARM interest rate at each adjustment. period”). Payments will be due monthly. Your minimum payment will equal are generally lower than rates for other types of credit. The interest you save What if the lender freezes or reduces your line of credit?. Board of Governors of the Federal Reserve System (FRB) (800) 755-1030 Minimum payment - The lowest amount that you must pay (usually monthly) 1/120th of the principal balance that was outstanding at the end of the draw Other than as disclosed in this paragraph, there are no annual or more frequent Less balance owed on mortgage - $40,000 could offset the costs of establishing and maintaining the line. Moreover, some Plans generally permit lenders to freeze or reduce a credit line if the value of Consumer Help www.ncua.gov Application fee ...... to keep your account in good standing. Under some plans, the minimum PO Box 1200 • Minneapolis, MN 55480 www.mycreditunion.gov period, plus the finance charges that have accrued on the remaining balance, periodic limitations on changes in the ANNUAL PERCENTAGE RATE. Potential line of credit $35,000 lenders waive some or all of the closing costs. the home “declines significantly” or, when the lender “reasonably believes” that payment may cover interest only; under others, it may include both principal you will be unable to make your payments due to a “material change” in your (888) 851-1920 Finance Companies, retail stores, auto dealers, mortgage companies, however, in no event shall the principal and interest payment be less than Maximum Rate and Payment Examples – If you had an outstanding In determining your actual credit limit, the lender will also consider your How will you repay your home equity plan? and interest. www.federalreserveconsumerhelp.gov Up-front charges, including points ...... financial circumstances. If this happens, you may want to: and other lenders, and credit bureaus $100.00 monthly. Your payment will vary as the Prime Rate varies. balance of $10,000 during the draw period, the minimum monthly payment at ability to repay the loan (principal and interest) by looking at your income, debts, Before entering into a plan, consider how you will pay back the money you Points (also called discount points) - One point is equal to 1 percent of the • Talk with your lender. Find out what caused the lender to freeze or Brokerage firms, mutual fund companies, and investment advisors Federal Trade Commission (FTC) the maximum ANNUAL PERCENTAGE RATE of 18.0% would be $152.88. and other financial obligations as well as your credit history. borrow. Some plans set a minimum monthly payment that includes a portion principal amount of a mortgage loan. For example, if a mortgage is $200,000, Closing costs ...... Minimum Payment Example-If you made only the minimum monthly of the principal (the amount you borrow) plus accrued interest. But, unlike with reduce your credit line and what, if anything, you can do to restore it. You may Securities and Exchange Commission (SEC) Consumer Repsonse Center Many home equity plans set a fixed period during which you can borrow one point equals $2,000. Lenders frequently charge points in both fixed-rate payments and took no other credit advances, it would take 9 years and 9 months This annual percentage rate could be reached during the 1st month of the typical installment loan agreements, the portion of your payment that goes be able to provide additional information to restore your line of credit, such as Complaint Center 600 Pennsylvania Avenue, N.W. money, such as 10 years. At the end of this “draw period,” you may be allowed documentation showing that your house has retained its value or that there has and adjustable-rate mortgages to cover loan origination costs or to provide 100 F Street, N.E. Washington DC 20580 Repayment Terms to pay off a credit advance of $10,000 at an ANNUAL PERCENTAGE RATE of 3.25%. draw period. to renew the credit line. If your plan does not allow renewals, you will not be able toward principal may not be enough to repay the principal by the end of the additional compensation to the lender or broker. These points usually are paid term. Other plans may allow payment of interest only during the life of the plan, not been a “material change” in your financial circumstances. You may want to Washington, DC 20549 (877) FTC-HELP or (877-382-4357) During that period, you make 116 monthly payments of $100.00***, followed by 1 If you had an outstanding balance of $10,000 at the beginning of the repayment to borrow additional money once the period has ended. Some plans may call for get copies of your credit reports (go to the CFPB’s website at consumerfinance. at closing and may be paid by the borrower or the home seller, or may be (202) 551-6551 www.ftc.gov During the draw period payment in full of any outstanding balance at the end of the period. Others may which means that you pay nothing toward the principal. If you borrow $10,000, split between them. In some cases, the money needed to pay points can be payment of $78.72. period, the minimum monthly payment at the maximum ANNUAL PERCENTAGE you will owe that amount when the payment plan ends. gov/askcfpb/5/can-i-review-my-credit-report.html for information about how to www.sec.gov www.ftc.gov/bcp allow repayment over a fixed period (the “repayment period”), for example, 10 borrowed (incorporated in the loan amount), but doing so will increase the loan Fees and Charges – Third Party Fees to Open the Account. In order to RATE of 18.0% would be $236.21. This annual percentage rate could be Regardless of the minimum required payment on your home equity line, you get free copies of your credit reports) to make sure all the information in them www.sec.gov/complaint/select.shtml Fair lending and fair housing issues Interest and principal payments ...... years. is correct. If your lender suggests getting a new appraisal, be sure you discuss amount and the total costs. Discount points (also called discount fees) are open, use, or maintain your account, you may have to pay certain fees to third reached at the start of the 1st month of the repayment period. Once approved for a home equity line of credit, you will most likely be able to may choose to pay more, and many lenders offer a choice of payment options. points that you voluntarily choose to pay in return for a lower interest rate. Agricultural Lenders US Department of Justice (DOJ) Many consumers choose to pay down the principal regularly as they do with appraisal firms in advance so that you know they will accept the new appraisal Farm Credit Administration Civil Rights Division parties in connection with opening the account. These fees generally range Historic Example – The following table shows how the annual percentage borrow up to your credit limit whenever you want. Typically, you will use special as valid. Interest only payments ...... other loans. For example, if you use your line to buy a boat, you may want to pay Security interest - If stated in your credit agreement, a creditor’s, lessor’s, or Office of Congressional and Public Affairs 950 Pennsylvania Avenue, N.W. between $0.00 and $3,000.00, depending upon the line amount, how the rate and the minimum monthly payments for a single $10,000 credit advance would checks to draw on your line. Under some plans, borrowers can use a credit card • Shop around for another line of credit. If your lender does not want to assignee’s legal right to your property (such as your home, stocks, or bonds) or other means to draw on the line. it off as you would a typical boat loan. 1501 Farm Credit Drive Housing and Civil Enforcement Section property is titled, and property location. Upon request or within three business have changed based on changes in the index over the past 15 years. The index Whatever your payment arrangements during the life of the plan—whether restore your line of credit, shop around to see what other lenders have to offer. that secures payment of your obligation under the credit agreement. McLean, VA 22102 Washington, DC 20530 Fully amortizing payments ...... There may be other limitations on how you use the line. Some plans may You may be able to pay off your original line of credit and take out another one. days from date you submit your application, we will provide you with an itemization values are from the last business day in the Index month of each year. While only one require you to borrow a minimum amount each time you draw on the line (for you pay some, a little, or none of the principal amount of the loan—when the Transaction fee - Fee charged each time a withdrawal or other specified (703)883-4056 (202)514-4713 plan ends, you may have to pay the entire balance owed, all at once. You must Keep in mind, however, that you may need to pay some of the same application transaction is made on a line of credit, such as a balance transfer fee or a cash www.fca.gov TTY–(202) 305-1882 FAX–(202) 514-1116 When the draw period ends of the fees that you will have to pay to third parties. payment amount per year is shown, payments would have varied during each year. example, $300) or keep a minimum amount outstanding. Some plans may also fees you paid for your original line of credit. require that you take an initial advance when the line is set up. be prepared to make this “balloon payment” by refinancing it with the lender, by advance fee. Small business lenders To report an incident of housing discrimination: 1-800-896-7743 If you ask, we will give you an itemization of the fees you will have to pay The table assumes that no additional credit advances were taken, that only the obtaining a loan from another lender, or by some other means. If you are unable Defined Terms Variable rate - An interest rate that changes periodically in relation to an index, Small Business Administration (SBA) [email protected] Balloon payment? ...... to third parties. minimum payments were made each month, and that the rate remained constant What should you look for when shopping for a plan? to make the balloon payment, you could lose your home. This glossary provides general definitions for terms commonly used in the If you decide to apply for a home equity line of credit, look for the plan that best such as the prime rate. Payments may increase or decrease accordingly. Consumer Affairs Fair lending and fair housing issues Early Termination Fee – If you close your Account and request during each year. It does not necessarily indicate how the index or your payments If your plan has a variable interest rate, your monthly payments may change. real estate market. They may have different legal meanings depending on the 409 3rd Street, S.W. Department of Housing and Urban Development (HUD) meets your particular needs. Read the credit agreement carefully, and examine Assume, for example, that you borrow $10,000 under a plan that calls for context. More information Renewal available? ...... a discharge of the mortgage, within 3 years after the date the Agreement is will change in the future. the terms and conditions of various plans, including the annual percentage rate For more information about mortgages, including home equity lines of Washington, DC 20416 Office of Fair Housing / Equal Opportunity interest-only payments. At a 10%interest rate, your monthly payments would Annual membership or maintenance fee - An annual charge for access to (800)U-ASK-SBA or (800)827-5722 451 7th Street, S.W. signed, you agree to pay an early termination fee of $500 to reimburse us for (APR) and the costs of establishing the plan. Remember, though, that the APR credit, visit consumerfinance.gov/mortgage. For answers to questions about Refinancing of balance by lender? ...... be $83. If the rate rises over time to 15%, your monthly payments will increase a financial product such as a line of credit, credit card, or account. The fee is www.sba.gov Washington, DC 20410 certain third-party charges we incurred on your behalf in connection with this for a home equity line is based on the interest rate alone and will not reflect to $125. Similarly, if you are making payments that cover interest plus some mortgages and other financial topics, visit consumerfinance.gov/askcfpb. You closing costs and other fees and charges, so you’ll need to compare these charged regardless of whether or not the product is used. may also visit the CFPB’s website at consumerfinance.gov/owning-a-home Commodity brokers, commodity trading advisers, commodity pools (800)669-9777 line. Examples of such charges include property valuation fees, title charges, portion of the principal, your monthly payments may increase, unless your www.hud.gov/complaints costs, as well as the APRs, among lenders. agreement calls for keeping payments the same throughout the plan period. Annual percentage rate (APR) - The cost of credit, expressed as a yearly to access interactive tools and resources for mortgage shoppers, which are and introducing brokers credit report fees and recording fees. rate. For closed-end credit, such as car loans or mortgages, the APR includes Variable interest rates If you sell your home, you will probably be required to pay off your home equity expected to be available beginning in 2014. Commodity Futures Trading Commission (CFTC) Late Charge – The Borrower shall pay a late charge equal to ten percent the interest rate, points, broker fees, and other credit charges that the borrower Housing counselors can be very helpful, especially for first-time home 1155 21st Street, N.W. Home equity lines of credit typically involve variable rather than fixed interest line in full immediately. If you are likely to sell your home in the near future, (10%) of the outstanding payment or ten dollars ($10.00), whichever is less, in rates. The variable rate must be based on a publicly available index (such as consider whether it makes sense to pay the up-front costs of setting up a line is required to pay. An APR, or an equivalent rate, is not used in leasing buyers or if you’re having trouble paying your mortgage. The U.S. Department of Washington, DC 20581 agreements. Housing and Urban Development (HUD) supports housing counseling agencies (866) 366-2382 the event any installment of principal and/or interest is not paid within fifteen the prime rate published in some major daily newspapers or a U.S. Treasury bill of credit. Also keep in mind that renting your home may be prohibited under the ©2021 Bankers Group Purchasing, Waltham, MA 02453 (03/2021)-36740 rate). In such cases, the interest rate you pay for the line of credit will change, terms of your agreement. throughout the country that can provide free or low-cost advice. You can search cftc.gov/ConsumerProtection/index.htm (15) days of the due date. IMPORTANTIMPORTANT TERMS TERMS OF OF OUR OUR HOME HOME EQUITY EQUITY LINE LINE OF OF CREDIT CREDIT PropertyProperty Insurance Insurance – – You You must must carry carry insurance insurance on on the the property property that that CheckCheck List List RE-RE- MARCHMARCH MARGINMARGIN *ANNUAL*ANNUAL MINIMUMMINIMUM securessecures this this line line of of credit. credit. PERCENTAGEPERCENTAGE AskAsk your your lender lender to to help help fill fill outout this this check check list. list. ThisThis disclosure disclosure contains contains important important information information about about our our Home Home Equity Equity Line Line of of YEARYEAR PAYMENTPAYMENT INDEXINDEX ThisThis is isa amargin margin MONTHLYMONTHLY MinimumMinimum Draw Draw Requirements Requirements – – None. None. STARTSSTARTS MONTHMONTH wewe have have used used RATERATE PAYMENTPAYMENT PLAN PLAN PLAN PLAN Credit.Credit. You You should should read read it itcarefully carefully and and keep keep a acopy copy for for your your records. records. recentlyrecently Rounded,Rounded, if ifappli. appli. TaxTax Deductibility Deductibility – – You You should should consult consult a atax tax advisor advisor regarding regarding the the BasicBasic Features Features A A B B AvailabilityAvailability of of Terms Terms – –All All of of the the terms terms disclosed disclosed below below are are subject subject to to change. change. 20072007 □□ 8.25%8.25% 0.000.00 8.25%8.25% 100.00***100.00*** deductibilitydeductibility of of interest interest and and charges charges for for the the line. line. If Ifthese these terms terms change change (other (other than than the the annual annual percentage percentage rate rate) and) and you you decide, decide, 20082008 □□ 5.25%5.25% 0.000.00 5.25%5.25% 100.00***100.00*** FixedFixed annual annual percentage percentage rate rate ...... %% %% VariableVariable Rate Rate Information Information – – The The line line has has a avariable-rate variable-rate feature, feature, asas a aresult, result, not not to to enter enter into into an an agreement agreement with with us, us, you you are are entitled entitled to to a arefund refund of of 20092009 3.25%3.25% 0.000.00 3.25%3.25% 100.00***100.00*** andand the the annual annual percentage percentage rate rate (corresponding (corresponding to to the the periodic periodic rate) rate) and and the the □□ anyany fees fees that that you you have have paid paid to to us us or or anyone anyone else else in in connection connection with with your your application. application. VariableVariable annual annual percentage percentage rate rate ...... %% %% minimumminimum payment payment can can change change as as a aresult. result. 20102010 □□ 3.25%3.25% 0.000.00 3.25%3.25% 100.00***100.00*** SecuritySecurity Interest Interest – – We We will will take take a amortgage mortgage on on your your home. home. You You could could TheThe annual annual percentage percentage rate rate includes includes only only interest interest and and no no other other costs. costs. 20112011 □□ 3.25%3.25% 0.000.00 3.25%3.25% 100.00***100.00*** EquityEquity %% %% loselose your your home home if ifyou you do do not not meet meet the the obligations obligations in in your your agreement agreement with with us. us. • • IndexIndex used used and and current current value value ...... TheThe annual annual percentage percentage rate rate is is based based on on the the value value of of an an index. index. The The index index is is 20122012 □□ 3.25%3.25% 0.000.00 3.25%3.25% 100.00***100.00*** PossiblePossible Actions Actions – – Under Under certain certain circumstances, circumstances, we we can can (1) (1) terminate terminate thethe Prime Prime Rate Rate published published in in the the Money Money Rates Rates section section of of The The Wall Wall Street Street Journal Journal 20132013 □□ 3.25%3.25% 0.000.00 3.25%3.25% 100.00***100.00*** • • AmountAmount of of margin margin ...... youryour line, line, require require you you to to pay pay us us the the entire entire outstanding outstanding balance balance in in one one payment, payment, (if(if more more than than one one Prime Prime Rate Rate is is published, published, the the higher higher rate rate shall shall be be used), used), as as most most 20142014 □□ 3.25%3.25% 0.000.00 3.25%3.25% 100.00***100.00*** andand charge charge you you certain certain fees; fees; (2) (2) refuse refuse to to make make additional additional extensions extensions of of credit; credit; recentlyrecently published published on on the the last last business business day day of of the the prior prior monthly monthly billing billing cycle. cycle. • • FrequencyFrequency of of rate rate adjustments adjustments ...... (3)(3) reduce reduce your your credit credit limit limit and and (4), (4), as as specified specified in in the the initial initial agreement, agreement, implement implement 20152015 □□ 3.25%3.25% 0.000.00 3.25%3.25% 100.00***100.00*** RateRate Floor Floor – – The The minimum minimum ANNUAL ANNUAL PERCENTAGE PERCENTAGE RATE RATE will will be be 3.0% 3.0%. . certaincertain changes changes in in the the plan. plan. 20162016 □□ 3.50%3.50% 0.000.00 3.50%3.50% 100.00***100.00*** ToTo determine determine the the annual annual percentage percentage rate rate, we, we apply apply a amargin margin to to the the value value of of the the index. index. • • Amount/lengthAmount/length of of discount discount (if (if any) any) ...... If Ifyou you ask, ask, we we will will give give you you more more specific specific information information concerning concerning whenwhen wewe 20172017  4.00%4.00% 0.000.00 4.00%4.00% 100.00***100.00*** □□ (If (If Checked) Checked) The The initial initial annual annual percentage percentage rate rate is is a adiscounted discounted rate rate or or cancan take take these these actions. actions. 20182018 □□ 4.75%4.75% 0.000.00 4.75%4.75% —0——0— • • InterestInterest rate rate cap cap and and floor floor ...... a apremium premium rate. rate. It Itis is not not based based on on the the index index and and margin margin used used for for later later rate rate MinimumMinimum Payment Payment Requirements Requirements – – You You can can obtain obtain advances advances of of 20192019 □□ 5.50%5.50% 0.000.00 5.50%5.50% —0——0— adjustments.adjustments. The The initial initial rate rate will will be be in in effect effect until until the the billing billing cycle cycle beginning beginning creditcredit for for 10 10 (ten) (ten) years years (the (the “draw “draw period”). period”). During During the the draw draw period, period, payments payments LengthLength of of Plan Plan . . 20202020 □□ 3.25%3.25% 0.000.00 3.25%3.25% —0——0— willwill be be due due monthly. monthly. Your Your minimum minimum monthly monthly payment payment will will equal equal all all accrued accrued AskAsk us us for for the the current current index index value, value, margin, margin, discount discount or or premium premium if ifapplicable applicable 20212021 □□ 3.25%3.25% 0.000.00 3.25%3.25% —0——0— DrawDraw period period ...... interestinterest as as of of the the closing closing date date of of the the billing billing cycle, cycle, provided provided the the payment payment shall shall andand . After. After you you open open a acredit credit line, line, rate rate information information will will notnot be be less less than than $100.00 $100.00, plus, plus any any amounts amounts past past due. due. Note: Note: your your minimum minimum annualannual percentage percentage rate rate * * TheThe Annual Annual Percentage Percentage Rate Rate has has been been adjusted adjusted to to reflect reflect any any applicable applicable interest interest rate rate caps. caps. bebe provided provided on on periodic periodic statements statements that that we we send send you. you. ** ** TheThe Annual Annual Percentage Percentage Rate Rate reflects reflects a adiscount discount we we have have used used recently. recently. RepaymentRepayment period period ...... monthlymonthly payment payment during during the the draw draw period period may may not not reduce reduce the the amount amount of of principal principal *** *** MinimumMinimum Payment Payment Amount. Amount. outstandingoutstanding on on this this line line of of credit. credit. Rate Rate Changes Changes – –The The annual annual percentage percentage rate rate can can change change at at the the beginning beginning InitialInitial fees fees AfterAfter the the draw draw period period ends, ends, you you will will no no longer longer be be able able to to obtain obtain credit credit advances advances ofof each each monthly monthly billing billing cycle. cycle. The The maximum maximum ANNUAL ANNUAL PERCENTAGE PERCENTAGE RATE RATE that that andand must must pay pay the the outstanding outstanding balance balance over over 10 10 (ten) (ten) years years (the (the “repayment “repayment cancan apply apply is is 18.0%. 18.0%. Rate Rate Floor Floor – – The The minimum minimum ANNUAL ANNUAL PERCENTAGE PERCENTAGE AppraisalAppraisal fee fee ...... period”).period”). Payments Payments will will be be due due monthly. monthly. Your Your minimum minimum payment payment will will equal equal RATERATE will will be be 3.0% 3.0%. . 1/120th1/120th of of the the principal principal balance balance that that was was outstanding outstanding at at the the end end of of the the draw draw OtherOther than than as as disclosed disclosed in in this this paragraph, paragraph, there there are are no no annual annual or or more more frequent frequent ApplicationApplication fee fee ...... period,period, plus plus the the finance finance charges charges that that have have accrued accrued on on the the remaining remaining balance, balance, periodicperiodic limitations limitations on on changes changes in in the the ANNUAL ANNUAL PERCENTAGE PERCENTAGE RATE RATE. . MaximumMaximum Rate Rate and and Payment Payment Examples Examples – – If Ifyou you had had an an outstanding outstanding Up-frontUp-front charges, charges, including including points points ...... however,however, in in no no event event shall shall the the principal principal and and interest interest payment payment be be less less than than $100.00$100.00 monthly. monthly. Your Your payment payment will will vary vary as as the the Prime Prime Rate Rate varies. varies. balancebalance of of $10,000 $10,000 during during the the draw draw period, period, the the minimum minimum monthly monthly payment payment at at thethe maximum maximum of of would would be be . . ClosingClosing costs costs ...... MinimumMinimum Payment Payment Example Example-If-If you you made made only only the the minimum minimum monthly monthly ANNUALANNUAL PERCENTAGE PERCENTAGE RATE RATE 18.0%18.0% $152.88$152.88 paymentspayments and and took took no no other other credit credit advances, advances, it itwould would take take 9 9 years years and and 9 9 months months ThisThis annual annual percentage percentage rate rate could could be be reached reached during during the the 1st 1st month month of of the the RepaymentRepayment Terms Terms toto pay pay off off a acredit credit advance advance of of $10,000 $10,000 at at an an ANNUAL ANNUAL PERCENTAGE PERCENTAGE RATE RATE of of 3.25%. 3.25%. drawdraw period. period. DuringDuring that that period, period, you you make make 116 116 monthly monthly payments payments of of $100.00*** $100.00***, followed, followed by by 1 1 If Ifyou you had had an an outstanding outstanding balance balance of of $10,000 $10,000 at at the the beginning beginning of of the the repayment repayment DuringDuring the the draw draw period period paymentpayment of of $78.72 $78.72. . period,period, the the minimum minimum monthly monthly payment payment at at the the maximum maximum ANNUAL ANNUAL PERCENTAGE PERCENTAGE FeesFees and and Charges Charges – – Third Third Party Party Fees Fees to to Open Open the the Account. Account. In In order order to to RATERATE of of 18.0% 18.0% would would be be $236.21 $236.21. This. This annual annual percentage percentage rate rate could could be be InterestInterest and and principal principal payments payments ...... open,open, use, use, or or maintain maintain your your account, account, you you may may have have to to pay pay certain certain fees fees to to third third reachedreached at at the the start start of of the the 1st 1st month month of of the the repayment repayment period. period. partiesparties in in connection connection with with opening opening the the account. account. These These fees fees generally generally range range HistoricHistoric Example Example – –The The following following table table shows shows how how the the annual annual percentage percentage InterestInterest only only payments payments ...... betweenbetween $0.00 $0.00 and and $3,000.00, $3,000.00, depending depending upon upon the the line line amount, amount, how how the the raterate and and the the minimum minimum monthly monthly payments payments for for a asingle single $10,000 $10,000 credit credit advance advance would would propertyproperty is is titled, titled, and and property property location. location. Upon Upon request request or or within within three three business business FullyFully amortizing amortizing payments payments ...... havehave changed changed based based on on changes changes in in the the index index over over the the past past 15 15 years. years. The The index index daysdays from from date date you you submit submit your your application, application, we we will will provide provide you you with with an an itemization itemization valuesvalues are are from from the the last last business business day day in in the the Index Index month month of of each each year. year. While While only only one one WhenWhen the the draw draw period period ends ends ofof the the fees fees that that you you will will have have to to pay pay to to third third parties. parties. paymentpayment amount amount per per year year is is shown, shown, payments payments would would have have varied varied during during each each year. year. If Ifyou you ask, ask, we we will will give give you you an an itemization itemization of of the the fees fees you you will will have have to to pay pay TheThe table table assumes assumes that that no no additional additional credit credit advances advances were were taken, taken, that that only only the the BalloonBalloon payment? payment? ...... toto third third parties. parties. minimumminimum payments payments were were made made each each month, month, and and that that the the rate rate remained remained constant constant EarlyEarly Termination Termination Fee Fee – – If Ifyou you close close your your Account Account and and request request duringduring each each year. year. It Itdoes does not not necessarily necessarily indicate indicate how how the the index index or or your your payments payments RenewalRenewal available? available? ...... a adischarge discharge of of the the mortgage, mortgage, within within 3 3 years years after after the the date date the the Agreement Agreement is is willwill change change in in the the future. future. signed,signed, you you agree agree to to pay pay an an early early termination termination fee fee of of $500 $500 to to reimburse reimburse us us for for RefinancingRefinancing of ofbalance balance by by lender? lender? ...... certaincertain third-party third-party charges charges we we incurred incurred on on your your behalf behalf in in connection connection with with this this line.line. Examples Examples of of such such charges charges include include property property valuation valuation fees, fees, title title charges, charges, creditcredit report report fees fees and and recording recording fees. fees. LateLate Charge Charge – – The The Borrower Borrower shall shall pay pay a alate late charge charge equal equal to to ten ten percent percent (10%)(10%) of of the the outstanding outstanding payment payment or or ten ten dollars dollars ($10.00), ($10.00), whichever whichever is is less, less, in in thethe event event any any installment installment of of principal principal and/or and/or interest interest is is not not paid paid within within fifteen fifteen (15)(15) days days of of the the due due date. date. ©2021©2021 Bankers Bankers Group Group Purchasing, Purchasing, Waltham, Waltham, MA MA 02453 02453 (03/2021)-36740 (03/2021)-36740 IMPORTANT TERMS OF OUR HOME EQUITY LINE OF CREDIT IMPORTANTProperty Insurance TERMS OF – OURYou must HOME carry EQUITY insurance LINE on theOF propertyCREDIT that Property Insurance – You must carry insurance on the property that Check List Check List RE- MARCH MARGIN *ANNUAL MINIMUM RE- MARCH MARGIN *ANNUAL MINIMUM secures this line of credit. secures this line of credit. PERCENTAGE PERCENTAGE Ask your lender to help fill out this check list. ThisAsk yourdisclosure lender contains to help important fill out this information check list. about our Home Equity Line of This disclosure contains important information about our Home Equity Line of YEAR PAYMENT INDEX This is a margin MONTHLY YEAR PAYMENT INDEX This is a margin MONTHLY Minimum Draw Requirements – None. MinimumSTARTS Draw RequirementsMONTH we have –used None. RATE PAYMENT STARTS MONTH we have used RATE PAYMENT PLAN PLAN Credit. You should read it carefully and keep a copy for your records.PLAN PLAN Credit. You should read it carefully and keep a copy for your records. recently Rounded, if appli. recently Rounded, if appli. Tax Deductibility – You should consult a tax advisor regarding the Tax Deductibility – You should consult a tax advisor regarding the Basic Features A B BasicAvailability Features of Terms – All of the terms disclosed below are subject A to change. B Availability of Terms – All of the terms disclosed below are subject to change. 2007 □ 8.25% 0.00 8.25% 100.00*** 2007 □ 8.25% 0.00 8.25% 100.00*** deductibility of interest and charges for the line. deductibility of interest and charges for the line. If these terms change (other than the annual percentage rate) and you decide, If these terms change (other than the annual percentage rate) and you decide, 2008 □ 5.25% 0.00 5.25% 100.00*** 2008 □ 5.25% 0.00 5.25% 100.00*** Fixed annual percentage rate ...... % % Fixed annual percentage rate ...... % % Variable Rate Information – The line has a variable-rate feature, Variable Rate Information – The line has a variable-rate feature, as a result, not to enter into an agreement with us, you are entitled to a refund of as a result, not to enter into an agreement with us, you are entitled to a refund of and the annual percentage rate (corresponding to the periodic rate) and the and2009 the annual□ percentage 3.25% rate (corresponding0.00 to the3.25% periodic rate)100.00*** and the 2009 □ 3.25% 0.00 3.25% 100.00*** any fees that you have paid to us or anyone else in connection with your application. any fees that you have paid to us or anyone else in connection with your application. Variable annual percentage rate ...... % % Variable annual percentage rate ...... % % minimum payment can change as a result. minimum2010 payment□ can change3.25% as a result.0.00 3.25% 100.00*** 2010 □ 3.25% 0.00 3.25% 100.00*** Security Interest – We will take a mortgage on your home. You could Security Interest – We will take a mortgage on your home. You could The annual percentage rate includes only interest and no other costs. 2011The annual□ percentage 3.25% rate includes0.00 only interest3.25% and no other100.00*** costs. 2011 □ 3.25% 0.00 3.25% 100.00*** Equity Equity % % lose your home if you do not meet the obligations in your agreement% with us.% lose your home if you do not meet the obligations in your agreement with us. • Index used and current value ...... • Index used and current value ...... The annual percentage rate is based on the value of an index. The index is 2012The annual□ percentage 3.25% rate is based0.00 on the value3.25% of an index. The100.00*** index is 2012 □ 3.25% 0.00 3.25% 100.00*** Possible Actions – Under certain circumstances, we can (1) terminate Possible Actions – Under certain circumstances, we can (1) terminate the Prime Rate published in the Money Rates section of The Wall Street Journal the2013 Prime Rate□ published in3.25% the Money Rates0.00 section of3.25% The Wall Street100.00*** Journal 2013 □ 3.25% 0.00 3.25% 100.00*** • Amount of margin ...... •your line,Amount require of margin you to ...... pay us the entire outstanding balance in one payment, your line, require you to pay us the entire outstanding balance in one payment, (if more than one Prime Rate is published, the higher rate shall be used), as most (if 2014more than one□ Prime Rate3.25% is published, 0.00 the higher rate3.25% shall be used),100.00*** as most 2014 □ 3.25% 0.00 3.25% 100.00*** and charge you certain fees; (2) refuse to make additional extensions of credit; and charge you certain fees; (2) refuse to make additional extensions of credit; recently published on the last business day of the prior monthly billing cycle. recently published on the last business day of the prior monthly billing cycle. • Frequency of rate adjustments ...... •(3) reduceFrequency your credit of rate limit adjustments and (4), as...... specified in the initial agreement, implement (3) reduce your credit limit and (4), as specified in the initial agreement, implement 2015 □ 3.25% 0.00 3.25% 100.00*** 2015 □ 3.25% 0.00 3.25% 100.00*** Rate Floor – The minimum ANNUAL PERCENTAGE RATE will be 3.0%. Rate Floor – The minimum ANNUAL PERCENTAGE RATE will be 3.0%. certain changes in the plan. certain changes in the plan. 2016 □ 3.50% 0.00 3.50% 100.00*** 2016 □ 3.50% 0.00 3.50% 100.00*** To determine the annual percentage rate, we apply a margin to the value of the index. To determine the annual percentage rate, we apply a margin to the value of the index. • Amount/length of discount (if any) ...... • If youAmount/length ask, we will of givediscount you (if more any) ...... specific information concerning when we If you ask, we will give you more specific information concerning when we 2017  4.00% 0.00 4.00% 100.00*** 2017  4.00% 0.00 4.00% 100.00*** □ (If Checked) The initial annual percentage rate is a discounted rate or □ (If Checked) The initial annual percentage rate is a discounted rate or can take these actions. can take these actions. 2018 □ 4.75% 0.00 4.75% —0— 2018 □ 4.75% 0.00 4.75% —0— • Interest rate cap and floor ...... • Interest rate cap and floor ...... a premium rate. It is not based on the index and margin used for later rate a premium rate. It is not based on the index and margin used for later rate Minimum Payment Requirements – You can obtain advances of Minimum Payment Requirements – You can obtain advances of 2019 □ 5.50% 0.00 5.50% —0— 2019 □ 5.50% 0.00 5.50% —0— adjustments. The initial rate will be in effect until the billing cycle beginning adjustments. The initial rate will be in effect until the billing cycle beginning credit for 10 (ten) years (the “draw period”). During the draw period, payments credit for 10 (ten) years (the “draw period”). During the draw period, payments Length of Plan Length of Plan . 2020 □ 3.25% . 0.00 3.25% —0— 2020 □ 3.25% 0.00 3.25% —0— will be due monthly. Your minimum monthly payment will equal all accrued will be due monthly. Your minimum monthly payment will equal all accrued Ask us for the current index value, margin, discount or premium if applicable 2021Ask us for the□ current index3.25% value, margin,0.00 discount3.25% or premium if—0— applicable 2021 □ 3.25% 0.00 3.25% —0— Draw period ...... Drawinterest period as ...... of the closing date of the billing cycle, provided the payment shall interest as of the closing date of the billing cycle, provided the payment shall and . After you open a credit line, rate information will and . After you open a credit line, rate information will not be less than $100.00, plus any amounts past due. Note: your minimum not beannual less than percentage $100.00 rate, plus any amounts past due. Note: your minimum * annualThe Annual percentage Percentage Rate rate has been adjusted to reflect any applicable interest rate caps. * The Annual Percentage Rate has been adjusted to reflect any applicable interest rate caps. be provided on periodic statements that we send you. be **provided The Annual on Percentageperiodic statementsRate reflects athat discount we sendwe have you. used recently. ** The Annual Percentage Rate reflects a discount we have used recently. Repayment period ...... Repaymentmonthly payment period ...... during the draw period may not reduce the amount of principal monthly payment during the draw period may not reduce the amount of principal *** Minimum Payment Amount. *** Minimum Payment Amount. outstanding on this line of credit. outstanding Rate Changes on this line – ofThe credit. annual percentage rate can change at the beginning Rate Changes – The annual percentage rate can change at the beginning Initial fees InitialAfter fees the draw period ends, you will no longer be able to obtain credit advances of eachAfter monthlythe draw billing period cycle. ends, The you maximumwill no longer ANNUAL be able PERCENTAGE to obtain credit RATE advances that of each monthly billing cycle. The maximum ANNUAL PERCENTAGE RATE that can apply is The minimum can apply is The minimum and must pay the outstanding balance over 10 (ten) years (the “repayment and must pay18.0%. the outstanding Rate Floor balance – over 10 (ten)ANNUAL years (the PERCENTAGE “repayment 18.0%. Rate Floor – ANNUAL PERCENTAGE Appraisal fee ...... Appraisal fee ...... period”). Payments will be due monthly. Your minimum payment will equal RATEperiod”). will bePayments 3.0%. will be due monthly. Your minimum payment will equal RATE will be 3.0%. 1/120th of the principal balance that was outstanding at the end of the draw 1/120thOther than of the as disclosedprincipal balancein this paragraph, that was thereoutstanding are no annual at the orend more of the frequent draw Other than as disclosed in this paragraph, there are no annual or more frequent Application fee ...... Application fee ...... period, plus the finance charges that have accrued on the remaining balance, periodicperiod, plus limitations the finance on changes charges in the that ANNUAL have accrued PERCENTAGE on the remaining RATE. balance, periodic limitations on changes in the ANNUAL PERCENTAGE RATE. Maximum Rate and Payment Examples – If you had an outstanding Maximum Rate and Payment Examples – If you had an outstanding Up-front charges, including points ...... Up-fronthowever, charges, in no includingevent shall points the ...... principal and interest payment be less than however, in no event shall the principal and interest payment be less than $100.00 monthly. Your payment will vary as the Prime Rate varies. balance$100.00 of monthly.$10,000 Yourduring payment the draw will period, vary as the the minimum Prime Rate monthly varies. payment at balance of $10,000 during the draw period, the minimum monthly payment at the maximum of would be . the maximum of would be . Closing costs ...... ClosingMinimum costs ...... Payment Example-If you made only the minimum monthly MinimumANNUAL Payment PERCENTAGE Example -IfRATE you made18.0% only the minimum$152.88 monthly ANNUAL PERCENTAGE RATE 18.0% $152.88 payments and took no other credit advances, it would take 9 years and 9 months Thispayments annual and percentagetook no other creditrate advances,could be itreached would take during 9 years the 1st and month 9 months of the This annual percentage rate could be reached during the 1st month of the Repayment Terms Repaymentto pay off a credit Terms advance of $10,000 at an ANNUAL PERCENTAGE RATE of 3.25%. drawto pay period.off a credit advance of $10,000 at an ANNUAL PERCENTAGE RATE of 3.25%. draw period. During that period, you make 116 monthly payments of $100.00***, followed by 1 DuringIf you that had period, an outstanding you make balance116 monthly of $10,000 payments at the of $100.00***beginning of ,the followed repayment by 1 If you had an outstanding balance of $10,000 at the beginning of the repayment During the draw period During the draw period payment of $78.72. period,payment the of $78.72minimum. monthly payment at the maximum ANNUAL PERCENTAGE period, the minimum monthly payment at the maximum ANNUAL PERCENTAGE Fees and Charges – Third Party Fees to Open the Account. In order to RATEFees of 18.0% and Charges would be $236.21– Third Party. This Fees annual to Open percentage the Account. rate In could order beto RATE of 18.0% would be $236.21. This annual percentage rate could be Interest and principal payments ...... Interest and principal payments ...... open, use, or maintain your account, you may have to pay certain fees to third reachedopen, use, at theor maintain start of the your 1st account, month ofyou the may repayment have to period.pay certain fees to third reached at the start of the 1st month of the repayment period. parties in connection with opening the account. These fees generally range partiesHistoric in connection Example with – Theopening following the tableaccount. shows Thesehow the fees annual generally percentage range Historic Example – The following table shows how the annual percentage Interest only payments ...... Interest only payments ...... between $0.00 and $3,000.00, depending upon the line amount, how the betweenrate and the$0.00 minimum and monthly$3,000.00, payments depending for a single upon $10,000 the line credit amount, advance how would the rate and the minimum monthly payments for a single $10,000 credit advance would property is titled, and property location. Upon request or within three business property is titled, and property location. Upon request or within three business Fully amortizing payments ...... Fully amortizing payments ...... have changed based on changes in the index over the past 15 years. The index have changed based on changes in the index over the past 15 years. The index days from date you submit your application, we will provide you with an itemization daysvalues from are fromdate youthe lastsubmit business your application,day in the Index we willmonth provide of each you year. with Whilean itemization only one values are from the last business day in the Index month of each year. While only one When the draw period ends Whenof the fees the thatdraw you period will have ends to pay to third parties. ofpayment the fees amount that you per willyear have is shown, to pay payments to third parties.would have varied during each year. payment amount per year is shown, payments would have varied during each year. If you ask, we will give you an itemization of the fees you will have to pay IfThe you table ask, assumes we will thatgive no you additional an itemization credit advances of the fees were you taken, will thathave only to paythe The table assumes that no additional credit advances were taken, that only the Balloon payment? ...... Balloonto third payment? parties...... tominimum third parties. payments were made each month, and that the rate remained constant minimum payments were made each month, and that the rate remained constant Early Termination Fee – If you close your Account and request duringEarly each Terminationyear. It does not necessarily Fee – Ifindicate you close how yourthe index Account or your and payments request during each year. It does not necessarily indicate how the index or your payments Renewal available? ...... Renewala discharge available? of the ...... mortgage, within 3 years after the date the Agreement is awill discharge change in of the the future. mortgage, within 3 years after the date the Agreement is will change in the future. signed, you agree to pay an early termination fee of $500 to reimburse us for signed, you agree to pay an early termination fee of $500 to reimburse us for Refinancing of balance by lender? ...... Refinancingcertain third-party of balance charges by lender? we ...... incurred on your behalf in connection with this certain third-party charges we incurred on your behalf in connection with this line. Examples of such charges include property valuation fees, title charges, line. Examples of such charges include property valuation fees, title charges, credit report fees and recording fees. credit report fees and recording fees. Late Charge – The Borrower shall pay a late charge equal to ten percent Late Charge – The Borrower shall pay a late charge equal to ten percent (10%) of the outstanding payment or ten dollars ($10.00), whichever is less, in (10%) of the outstanding payment or ten dollars ($10.00), whichever is less, in the event any installment of principal and/or interest is not paid within fifteen the event any installment of principal and/or interest is not paid within fifteen (15) days of the due date. (15) days of the due date. ©2021 Bankers Group Purchasing, Waltham, MA 02453 (03/2021)-36740 ©2021 Bankers Group Purchasing, Waltham, MA 02453 (03/2021)-36740