Home Equity
What’s the difference in a Home Equity
Line of Credit and a Home Equity Loan?
How do I decide which loan is best for me?
What are the requirements for property used
as collateral for a Home Equity Loan or Line of Credit?
What is "available equity?"
What is the turnaround time for the Home Equity
loan process?
How will my Home Equity loan closing be
handled?
How soon will I get my Home Equity loan proceeds
once I sign the closing documents?
What are the closing costs for a Home Equity
loan?
What happens if I pay off or close my Home
Equity loan within 36 months?
If I sell my home, can the buyer assume
my Home Equity Line or Home Equity Loan?
How can I calculate what my minimum monthly
payment amount will be on my Home Equity Line of Credit?
How can I make my Home Equity payments?
Can principal payments be made on interest only equities?
How can I access funds from my Home Equity
Line of Credit?
Can I extend the draw period on my Home
Equity Loan or Line of Credit?
If I get a fixed rate Home Equity Loan,
when is the interest rate determined?
Are there any rate discounts available
on a Home Equity Line of Credit?
What’s the difference in
a Home Equity Line of Credit and a Home Equity Loan?
A Home Equity Line is an open line of credit. You are approved for
a specific credit limit that can be used repeatedly over a period of time.
It has a variable rate based on the prime rate, and monthly minimum payments
are variable because they are calculated as a percentage of the balance you
owe.
A Home Equity Loan is made for a fixed amount at a fixed
rate and the monthly payment amount is fixed for the specific term
of the loan. All loan proceeds are disbursed when the loan is made
and no advances can be made after the disbursement.
Both are loans using your home as collateral, without paying off your first
mortgage. Our Equity Comparison Chart can
help compare the differences between the loans.
How do I decide which loan is
best for me?
That decision is based on your needs, personal preferences and feelings about
fixed versus variable loan rates. Generally speaking, a fixed-rate Home Equity
Loan is good when you want to consolidate debts or manage large, one-time expenses,
and a variable-rate Home Equity Line of Credit is good for expenses that may
reoccur such as college tuition or home improvements. More details on the two
types of equity loans are available on our Equity
Comparison Chart.
What are the requirements for
property used as collateral for a Home Equity Loan or Line of
Credit?
The property being used as collateral must be located in Virginia. Either your
second or vacation home (not used for rental) located more than 50 miles from
your primary residence can be used as collateral. Eligible properties include
one to four family homes, condominiums, and double-wide manufactured homes
on a permanent foundation. Any liens other than your first mortgage must be
paid off in full before or at closing, and all owners holding a title interest
in the property must sign all appropriate closing documents. Property insurance
is required on all properties being used as collateral.
What is "available equity?"
Subtract the total amount of mortgages you owe on your home from the appraised
value of your home; the difference is the available equity. Other factors
such as income, debts, ability to repay and other credit criteria will also
help to determine your approved loan amount. Use our home
equity estimator to help determine your available equity.
What is the turnaround time for
the Home Equity loan process?
From application to closing, the process typically takes 2 to 4 weeks and includes
the ordering of any documents that may be required (payoff statements, appraisal,
title examination, etc.)
How will my Home Equity loan
closing be handled?
For your convenience we will arrange for a notary to meet with you at a location of your choice. All owners of the property will need to sign.
How soon will I
get my Home Equity loan proceeds once I sign the closing documents?
After closing, as required by law, you have 3 business days to cancel your
loan transaction with the credit union. Your loan proceeds can be disbursed
on the fourth business day.
What are the
closing costs for a Home Equity loan?
Currently, the credit union pays all the closing costs and closing fees associated
with your Home Equity Loan or Line of Credit, as long as it is kept open for
36 months after the opening date.
What happens if I pay off or close
my Home Equity loan within 36 months?
If you close your Home Equity Line of Credit or pay off your Home Equity Loan
within 36 months of opening it, you will be required to repay the closing costs
and closing fees associated with it. These costs include things such as title
examination, automated home valuation, flood certification and recording fees.
If I sell my home, can the buyer
assume my Home Equity Line or Home Equity Loan?
No, these loans cannot be assumed.
How can I calculate what my minimum
monthly payment amount will be on my Home Equity Line of Credit?
Your payment will vary based on the balance you owe, rather than the interest
rate. Your minimum monthly payment is 1.5% of the balance you owe or $50, whichever
is greater. With our interest-only payment option, your monthly minimum payment
will be the accrued interest on the outstanding balance, plus any amounts past
due or exceeding your credit limit, along with any other charges due or $50,
whichever is greater. The payment amount due and due date will appear on your
regular monthly Virginia Credit Union statement.
How can I make my Home Equity
payments?
Payments on your fixed Home Equity Loan can be made through QuikLine,
Home Banking, postal mail, at any VACU branch, or using any form of automatic
payment such as ACH
or automatic transfer. All payments
are due by the 25th of the month.
Payments on your Home Equity Line of Credit can be made
through QuikLine, Home Banking, postal mail, or any VACU branch. Automatic transfer can only be made on a monthly basis and the payment amount is based on 1.5% of the balance you owe. With our interest-only payment
option, your monthly minimum payment will be the accrued interest
on the outstanding balance, plus any amounts past due or exceeding
your credit limit, along with any other charges due or $50, whichever
is greater. The payment amount due and due date will appear on
your regular monthly Virginia Credit Union statement. All payments are due by the 25th
of the month.
Can
principal payments be made on interest-only equities?
Yes. In the event you make a payment greater than the amount required,
the overage you paid will be applied to the principal of the
loan. In addition, you may make a payment to Principal Only,
however
this payment would not satisfy the required monthly payment if
it had not been made.
How can I access funds from
my Home Equity Line of Credit?
You can write a Home Equity Line of Credit check, transfer funds to your checking
or another VACU account through QuikLine
Phone Banking or Internet Home
Banking, by calling Member Services, or by
visiting one of our branches.
Can I extend the draw period
on my Home Equity Loan or Line of Credit?
No, but you can apply for a new Home Equity Loan or Line of Credit. You will
need to have sufficient equity in the property to be considered for the new
requested limit.
If I get a fixed rate Home
Equity Loan, when is the interest rate determined?
You will get the rate in effect the day we call you to arrange the closing
OR the rate in effect on the day before the closing—whichever is lower.
We give you the better rate.
Are there any rate discounts
available on a Home Equity Line of Credit?
There are no discounts available at this time.
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