HOME EQUITY LINE OF CREDIT APPLICATION PACKET Thank you for applying for a Home Equity Line of Credit with Investors Bank. We will consider loans on one to four family homes which are owner-occupied as your primary place of residence and result in a first or second lien position on the property. We will also consider loans on one to two family homes which are owner-occupied as a true vacation home, when the loan results in a first lien position. We do not lend on co-ops or on properties that are or have been listed on the market for sale for less than six months. If you have any questions regarding the Home Equity Line of Credit application, please contact the Investors Bank Loan Originations Department at (732) 452-3443 or visit your local branch. To help expedite the process of your loan request we require that you provide the following documents/information: Loan application verified for the following items: Loan amount completed. Loan purpose completed. If Applicants are apply for joint credit - Loan application must be signed by applicants on the top of 1 st page. Borrower’s e-mail address and all contact telephone/mobile numbers are completed on application. Applicant’s property information completed in Section 3 (estimated value, taxes, insurance, HOA dues, etc.). If purpose of loan is debt consolidation (all debts to be paid are listed in the applicable debt section). Complete entire application. Loan application disclosure forms completed and signed: ECOA Notice to Loan Applicant. Home Equity Line Of Credit – Disclosure. Notice of Re-Verification of Credit History & Employment. Servicing Disclosure Statement. Automatic Debit Payment Disclosure. Authorization to Release Information. USA Patriot Act Information. Supply the Bank with supporting validation documents per the checklist below: Copies of all W-2 forms for most recent two years. Copy of 30 days most current paystubs. Copies of current mortgage statement, tax bill and homeowners insurance policy to include the insurance premium on subject property. If Self-employed – provide: ○ copies of most recent two years complete personal and business federal income tax returns to include K-1s (if applicable). If Retired – provide: ○ copies of most recent two years complete federal income tax returns (including copies of 1099s) ○ copy of current year social security awards letter and/or proof of pension benefits. If Rental Property (s) Owned – provide for each property owned: ○ copies of most recent two years complete personal federal income tax returns. ○ copies of most recent mortgage statements. ○ copies of the declaration page of the hazard insurance and flood insurance to include insurance premium. ○ copies of tax bill(s). For Condominium Units, Townhouses, Plan Unit Developments (PUD) – include a copy of the monthly maintenance fees / homeowners association (HOA) dues. If Divorced – provide: ○ copy of final Divorce Decree and ○ copy of Property Settlement Agreement. Provide your e-mail address for quick access to a copy of your property appraisal/valuation. Email address: Please submit all of the above applicable forms via one of the options: MAIL: Investors Bank, ATTN: Loan Originations, 101 Wood Ave South, Iselin, NJ 08830, or E-MAIL: [email protected]or HAND DELIVER: Drop off at any local branch of Investors Bank. Print Applicant’s Name Date Print Co-Applicant’s Name Date Applicant’s Signature Date Co-Applicant’s Signature Date If application is received by branch personnel: Branch #: Signature of branch personnel reviewing application Print Name
Transcript
HOME EQUITY LINE OF CREDIT APPLICATION PACKETThank you for applying for a Home Equity Line of Credit with Investors Bank. We will consider loans on one to four family homes which are owner-occupied as your primary place of residence and result in a first or second lien position on the property. We will also consider loans on one to two family homes which are owner-occupied as a true vacation home, when the loan results in a first lien position. We do not lend on co-ops or on properties that are or have been listed on the market for sale for less than six months. If you have any questions regarding the Home Equity Line of Credit application, please contact the Investors Bank Loan Originations Department at (732) 452-3443 or visit your local branch. To help expedite the process of your loan request we require that you provide the following documents/information: Loan application verified for the following items: Loan amount completed. Loan purpose completed. If Applicants are apply for joint credit - Loan application must be signed by applicants on the top of 1st page. Borrower’s e-mail address and all contact telephone/mobile numbers are completed on application. Applicant’s property information completed in Section 3 (estimated value, taxes, insurance, HOA dues, etc.). If purpose of loan is debt consolidation (all debts to be paid are listed in the applicable debt section). Complete entire application.Loan application disclosure forms completed and signed: ECOA Notice to Loan Applicant. Home Equity Line Of Credit – Disclosure. Notice of Re-Verification of Credit History & Employment. Servicing Disclosure Statement. Automatic Debit Payment Disclosure. Authorization to Release Information. USA Patriot Act Information.Supply the Bank with supporting validation documents per the checklist below: Copies of all W-2 forms for most recent two years. Copy of 30 days most current paystubs. Copies of current mortgage statement, tax bill and homeowners insurance policy to include the insurance premium on subject
property. If Self-employed – provide:
○ copies of most recent two years complete personal and business federal income tax returns to include K-1s (if applicable). If Retired – provide:
○ copies of most recent two years complete federal income tax returns (including copies of 1099s)○ copy of current year social security awards letter and/or proof of pension benefits.
If Rental Property (s) Owned – provide for each property owned:○ copies of most recent two years complete personal federal income tax returns.○ copies of most recent mortgage statements.○ copies of the declaration page of the hazard insurance and flood insurance to include insurance premium.○ copies of tax bill(s).
For Condominium Units, Townhouses, Plan Unit Developments (PUD) – include a copy of the monthly maintenance fees /homeowners association (HOA) dues.
If Divorced – provide:○ copy of final Divorce Decree and○ copy of Property Settlement Agreement.
Provide your e-mail address for quick access to a copy of your property appraisal/valuation.
Email address:
Please submit all of the above applicable forms via one of the options: MAIL: Investors Bank, ATTN: Loan Originations, 101 Wood Ave South, Iselin, NJ 08830, or E-MAIL: [email protected] or HAND DELIVER: Drop off at any local branch of Investors Bank.
Print Applicant’s Name Date Print Co-Applicant’s Name Date
Applicant’s Signature Date Co-Applicant’s Signature Date
If application is received by branch personnel: Branch #:
Signature of branch personnel reviewing application Print Name
Revised 05/2017
ECOA NOTICE TO LOAN APPLICANT
You are required to read this statement concerning the Equal Credit Opportunity Act of 1975 (ECOA), as amended, before our loan interviewer may commence taking your application. The reason for this is to enable Investors Bank to comply with this law in a manner which provides our customers with the best possible service. At the bottom of this notice you will be asked to sign and acknowledge that you have read it and aware of your rights under this law. If you refuse to sign, the interviewer cannot proceed with the application.
1. It is the policy of Investors Bank to comply with all applicable laws and regulations. Sinceyou are about to request, in writing, that we extend mortgage credit to you based on theinformation you are about to give, we want you to be aware of your rights under the EqualCredit Opportunity Act of 1975, as amended.
2. The Federal Equal Credit Opportunity Act prohibits creditors from discriminating againstcredit applicants on the bases of race, color, religion, national origin, sex, marital status, age(providing the applicant has the capacity to enter into a binding contract); because all or part ofthe applicants income derives from any public assistance program; or, because the applicanthas in good faith exercised any right under the Consumer Credit Protection Act.
3. The Federal agency that administers compliance with this law concerning our company is:Consumer Financial Protection Bureau, PO Box 4503, Iowa City, IA 52244.
4. Under this law there are three (3) classes of marital status, and they are:a) Unmarried, which includes anything, which is not remaining two (2) choices.b) Married.c) Separated.
We are not concerned with any other category.5. If you are under legal obligation to anyone to pay alimony, child support, or separate
maintenance, we are required to document the amount of any such obligation, and its duration,by requesting written evidence.
6. If you wish to claim as income, the receipt of any income from sources other than your normalemployment, you may do so. If such income is claimed and is to be evaluated in determiningyour eligibility for the requested credit, we will require written evidence of this income.
7. When we have a completely documented application file, we will render our decision. If itshould become unfortunately necessary to make an adverse decision, you are entitled to beinformed, in writing, of such decision within thirty (30) days of the decision.
I acknowledge that I have read the above statement/notice and am aware of Investors Bank’s policies concerning the above-mentioned portion of the Equal Credit Opportunity Act.
_______________________________________ _____________________________________ Print Applicant’s Name Print Co-Applicant’s Name
_______________________________________ ____________________________________ Date Date
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⃝
$
□□□
□ YEARS ONTHIS JOB
$
□□□
□ YEARS ONTHIS JOB
$
Home Improvements
Term/Number of Years
I am applying for Joint Credit. Each Borrower intends to apply for joint credit.
Special Home Improvement Loan
Co-Borrower Signature
HOME TELEPHONE NO.
I am applying for Individual Credit.
BUSINESS ADDRESS - NO. AND SREET CITY
YEARS THEREZIP CODE
PREVIOUS HOME ADDRESS (if less than two years at present address)
E-MAIL ADDRESS
(GROSS MONTHLY)
DATE OF RETIREMENT:
WILL YOU BE RETIRING WITHIN THE NEXT 3 YEARS? IF "YES" PLEASE PROVIDE DATE OF RETIREMENT AND INCOME YOU EXPECT TO RECEIVE AT TIME OF RETIREMENT.
ZIP CODECITY
NAME OF EMPLOYER
INCOME:
DEP.
(GROSS MONTHLY)
SOCIAL SECURITY NO.
BUSINESS ADDRESS - NO. AND SREET
CELL NO.
NO. OF
YEARS THERE
SEPARATED
2. Personal Information About Co-Applicant
STATE
DEP.
Home Equity Line of Credit Loan
1. Personal Information About ApplicantNO. OF
YEARS THERE
POSITION
E-MAIL ADDRESS
NAME AND ADDRESS OF PREVIOUS EMPLOYER (if less than two years)
POSITION
THIS LINE OF WORKOR PROFESSION
YEARS THERE
SALARY
FIRST, MIDDLE, LAST NAME Of CO-APPLICANT MARITAL STATUS DATE OF BIRTH
(MONTH/DATE/YEAR)
SALARYYEARS THERE
DATE OF RETIREMENT:
WILL YOU BE RETIRING WITHIN THE NEXT 3 YEARS? IF "YES" PLEASE PROVIDE DATE OF RETIREMENT AND INCOME YOU EXPECT TO RECEIVE AT TIME OF RETIREMENT.
OTHER INCOME (GIVE SOURCE AND GROSS MONTHLY AMOUNT) Alimony, child support or separate maintenance income need not be revealed if you do not wish to have it considered as a basis for repaying this obligation.
YEARS EMPLOYED IN
UNMARRIED (includes single, divorced, widowed)
ZIP CODE
NAME AND ADDRESS OF PREVIOUS EMPLOYER (if less than two years) POSITION
INCOME:
HOME TELEPHONE NO. CELL NO.
STATE
TELEPHONE NO.
OR PROFESSION
STATE
NAME OF EMPLOYER
SALARY
THIS LINE OF WORK
OTHER INCOME (GIVE SOURCE AND GROSS MONTHLY AMOUNT) Alimony, child support or separate maintenance income need not be revealed if you do not wish to have it considered as a basis for repaying this obligation.
Loan AmountLoan Purpose: (Must check at least one)
DATE OF BIRTHMARITAL STATUS
HOME ADDRESS - NO. AND STREET
MARRIED
POSITION SALARY
YEARS EMPLOYED INSELF-EMPLOYED
101 Wood Avenue South, Iselin, New Jersey 08830Phone: 732-452-3443 ▪ Fax: 732-603-3968
HOME ADDRESS - NO. AND STREET CITY/TOWN
MARRIED
SOCIAL SECURITY NO.FIRST, MIDDLE, LAST NAME OF APPLICANT
HOME EQUITY LOAN APPLICATION
YEARS THERE
(MONTH/DATE/YEAR)
ZIP CODE
SEPARATED
UNMARRIED (includes single, divorced, widowed)
Refinancing for Cash Out - No existing liens
$
$
SELF-EMPLOYED TELEPHONE NO.
STATE
CITY/TOWN
PREVIOUS HOME ADDRESS (if less than two years at present address)
Revised 02/2018
Refinancing to pay off any existing liens on subject property
Refinancing for other purposes:
Borrower Signature
Term/Number of Years
Fixed Rate Equity Loan
Purchase Of Any Additional Real Estate
□ YES □ NO
$ $ $
$ $
$ $ $
□ YES □ NO □ YES □ NO
1 $
2 $
3 $
4 $
5 $
6 $
IN WHAT NAME NUMBE BALANCE THLY
1 $ $
2 $ $
3 $ $
4 $ $
5 $ $
6 $ $
7 $ $
$ $
$ $
2-4 UNIT DWELLING
DATE HOME PURCHASED PURCHASE PRICE
ANNUAL TAXES HOMEOWNERS INSURANCE PREMIUM
PLAN UNIT DEVELOPMENT (PUD)
□ □ □
Revised 02/2018
Include all cash, savings accounts, checking accounts, stock and other assets easily converted into cash, and other real estate owned.
COUNTY PRINCIPAL RESIDENCE OF APPLICANT
SINGLE FAMILY RESIDENCE
□CONDOMINIUM
6. Applicant's Debts
LIST ALL DEBTS
Include bank, finance company, credit card, store charge and personal debts, also alimony, support payments and other mortgage loans.
MORTGAGE BALANCE
NAME AND ADDRESS OF BANK, CREDIT UNION, ETC.
MONTHLY PAYMENT
NO. AND STREET
MONTHLY ASSOCIATION FEE
ZIP CODE
statement can be meaningfully and fairly presented on a combined basis, otherwise separate statements and schedules are required.
PRESENT ESTIMATED VALUE
OTHER MORTGAGES: LIST CO. NAME, LOAN BALANCE AND MONTHLY PAYMENT.
AMT. OF ORIGINAL MORTGAGE
3. Applicant's Property Information
4. Subject Property Mortgage Information
PROPERTY LOCATION
AND DESCRIPTION
This statement and any applicable supporting schedules may be completed jointly by both applicants if their assets and liabilities are sufficiently joined so that the
Attach additional sheet if necessary. If none, state "None."
STATEADDRESS CITY/TOWN
AUTOMOBILE (LOANS OR LEASE) BEING FINANCED THROUGH
PLEASE INDICATE WHICH OF THE ABOVE DEBTS, IF ANY, WILL BE PAID IN FULL WITH THIS LOAN:
DO MORTGAGE PAMENTS
LIST ASSETSACCOUNT # CASH OR MARKET VALUE
INSURANCE? ACCOUNT NUMBER ADDRESS
INCLUDE TAXES?
MORTGAGE INFORMATION
NAME AND ADDRESS OF CREDITOR
5. Applicant's Financial Statement(MORE DETAILED STATEMENTS AND SCHEDULES MAY BE REQUIRED)
Attach additional sheet if necessary.
MORTGAGE HELD BY
□ □□ □ □ □ □ □□ □
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□ □□ □ □ □ □ □□ □ □ □ □ □□ □
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□ □ □ □ □ □□ □
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⃝ NO ⃝
⃝ NO ⃝
⃝ NO ⃝
□ □ □ □
To Be Completed by Financial Institution (for application taken in person): The Demographic Information was provided through:
To Be Completed by Financial Institution (for application taken in person):
Female
YES
YES
Male
I do not wish to provide this information
White
Other Asian - Enter race:Examples: Hmong, Laotian, Thai, Pakistani, Cambodian, etc.
Native Hawaiian or Other Pacific Islander
Samoan
Other Pacific Islaner - Enter race:
Examples: Fijian, Tongan, etc.
Native Hawaiian
Instructions: You may select one or more "Hispanic or Latino" origins and one or more designations for "Race". If you do not wish to provide some or all of this information, select the applicable check box.
Was the sex of the Borrower collected on the basis of visual observation or surname?
principal tribe:
Asia
Asian Indian
I do not wish to provide this information
Sex:
Chinese Filipino
Black or African American
Ethnicity:
Hispanic or Latino - Check one or more
Mexican Puerto Rican
Japanese Korean
American Indian or Alaska Native - Enter name of enrolled or
Vietnamese
Examples: Argentinean, Colombian, Dominican, Nicaraguan, Salvadoran, Spaniard, etc.
Cuban
Not Hispanic or Latino
I do not Wish to provide this information
Race:
Sex:
Guamanian or Chamorro
principal tribe:
Mexican
Other Hispanic or Latino - Enter Origin :
Asia
Ethnicity:
American Indian or Alaska Native - Enter name of enrolled or
Examples: Argentinean, Colombian, Dominican, Nicaraguan, Salvadoran, Spaniard, etc.
Race:
Puerto Rican Cuban
Not Hispanic or Latino
I do not Wish to provide this information
Japanese
DEMOGRAPHIC INFORMATION OF BORROWER FOR GOVERNMENT MONITORING PURPOSES
The purpose of collecting this information is to help ensure that all applicants are treated fairly and that the housing needs of communities and neighborhoods are being fulfilled. For residential mortgage lending, federal law requires that we ask applicants for their demographic information (ethnicity, sex, and race in order to monitor our compliance with equal credit opportunity, fair housing, and home mortgage disclosure laws. You are not required to provide this information, but are encouraged to do so. The law provides that we may not discriminate on the basis of this information, or on whether you choose to provide it. However, if you choose not to provide the information and you have made this application in person, federal regulations require us to note your ethnicity, sex, and race on the basis of visual observation or surname.
CO-APPLICANT:
Other Hispanic or Latino - Enter Origin :
APPLICANT:
Hispanic or Latino - Check one or more
ChineseAsian Indian
Examples: Hmong, Laotian, Thai, Pakistani, Cambodian, etc.Other Asian - Enter race:
KoreanFilipinoVietnamese
Revised 02/2018
Native Hawaiian or Other Pacific Islander
Native Hawaiian
Was the ethnicity of the Borrower collected on the basis of visual observation or surname?
Was the race of the Borrower collected on the basis of visual observation or surname?
Face-to-Face Interview (includes Electronic Media w/ Video Component)
YES
Guamanian or Chamorro
I do not wish to provide this information
Samoan
Telephone Interview Fax or Mail Email or Internet
Black or African American
Examples: Fijian, Tongan, etc.
White
Other Pacific Islaner - Enter race:
Female
Male
I do not wish to provide this information
⃝ No
□ / (mm/yyyy)
□□□
MO DAY 1 2
⃝
TO BE COMPLETED BY INTERVIEWER
Currently retired, discharged, or separated from service
FINANCIAL INSTITUTION NMLS #
YEAR
I/We understand that an email address for each loan applicant must be provided to receive information via email.
/ / CO-APPLICANT'S SIGNATURE
I/We authorize copy of documents to be used as original.
Only period of service was as a non-activated member of the Reserve or National Guard
Surviving Spouse
Please read this statement before signing
Everything that I have stated in this application is correct to the best of my knowledge. I understand that you will retain this application whether or not it is approved. You are authorized to check my credit and employment history.
I/We authorize Investors Bank to order a consumer credit report to verify other credit information. It is understood that signing below authorizes Investors Bank to obtain credit information on applicable parties.
NMLS #
DATE
Investors Bank 411729
DATE OF APPLICATION
PRINT BRANCH REPRESENTATIVE NAME
APPLICANT'S SIGNATURE
BRANCH REPRESENTATIVE SIGNATURE
Revised 02/2018
If Yes, check all that apply: Currently serving on active duty with projected expiration date of service/tour
Did you (or your deceased spouse) ever serve, or are you currently serving, in the United States Armed Forces?
Military Service
Yes
I/We authorize Investors Bank to send the diclosures, other documents, and related correspondence to the email addresses identified on this application.
BRANCH NAME & NUMBER
Page 1 of 4
Rev 4/2020
HOME EQUITY LINE OF CREDIT – DISCLOSURE
Important Information About The Home Equity Line of Credit
Please Read Carefully – Sign And Return
This disclosure contains important information about our Home Equity Line of Credit. It is subject to change at any time. Your terms will be set at the time we receive a signed loan application from you.
1. Availability of Terms: The terms described below outline Investors’ Bank Home Equity Line of Credit. If any of these terms change, other than the annual percentage rate, prior to you entering into the loan agreement, you are entitled to a refund of any fees that you have paid to Investors Bank in connection with your application.
The terms of your loan agreement and note may also include a requirement that your minimum monthly loan payment be deducted automatically from a checking account at Investors Bank.
2. Security Interest: Investors Bank will secure a mortgage lien on your home. You could lose your home if you fail to meet the obligations in the Investors Bank Home Equity Line of Credit Agreement that you will sign, should your loan be approved.
3. Possible Actions: Under certain circumstances Investors Bank can (1) terminate your credit line, require you to pay the outstanding balance and possibly charge you certain legal fees for the collection of the funds due; (2) refuse to make additional extensions of credit; and (3) reduce your credit limit.
You may ask for more specific information concerning when these actions can be taken, which Investors Bank will provide as soon as reasonably possible and before you enter into the loan agreement.
4. Determination of Credit Limit: Investors Bank will consider your ability to repay the loan (principal and interest) by looking at your income, debts, and other financial obligations as well as your credit history. The Bank’s qualifying interest rate is based on the “Floor” rate (4.00%) without any discounts in effect at time of application plus an Interest Rate Margin of One and Three Quarters of One Percent (1.75%).
The “Floor” rate is the minimum interest rate currently agreed-upon by the Lender.
The “Interest Rate Margin” is an interest rate added to the index rate currently used to qualify the Borrower.
5. Minimum Payment Requirements: You can obtain advances on your outstanding credit line for ten (10) years (the “Draw Period”). During the draw period payments will be due monthly. Your minimum interest payment will equal the Finance Charges that accrued on the outstanding balance. Upon the sale or transfer of the property securing the line, the entire outstanding principal balance plus any accrued interest will be due in full. This is referred to as a balloon payment.
6. Minimum Payment Example: On an outstanding credit line advance of $10,000 your minimum interest payment would be calculated as follows:
In this example we are using 30 days at an annual percentage rate of 4.00% which is currently the “Floor” rate.
Example of payment calculation: $10,000 x 4.00%/12 = $33.33
Your minimum interest monthly payment would be, in this example $33.33.
During the interest-only period (the “Draw Period”), the minimum payment will not reduce the principal that is outstanding on your credit line.
After the draw period, you will no longer be able to obtain credit advances and must pay the outstanding balances over fifteen (15) years (the repayment period). Payments of principal and interest will be due monthly.
Page 2 of 4
Rev 4/2020
7. Amortization Rate and Payment: At the end of the draw period in year 11 the interest rate shall be the prevailing 15 year fixed home equity interest rate in effect at that time. You will be notified of your change in rate and new principal and interest monthly payment for the remaining period of your loan 45 days prior to the due date of your new monthly payment. If the index is no longer available, we may choose a new index that is based on comparable information. You will be given notice of any change of index.
8. Property Taxes, Homeowners Insurance and Flood Insurance: Borrower is responsible to maintain property taxes, homeowners’ insurance and flood insurance (if applicable) current during the life of the loan.
9. Fees and Charges: A $50.00 annual maintenance fee will be charged each year on the anniversary of the origination date of the loan. An initial supply of checks will be provided for accessing your credit line. Future checks, if needed, are supplied at no cost to you.
10. New York Properties: Investors Bank will be responsible for the Mortgage Recording Tax fee on loans up to $500,000. (However, on refinancing of existing Investors Bank Home Equity Lines of Credit, the Borrower will be responsible for the Mortgage Recording Tax fee, excluding the .25% lender’s portion.)
11. New Jersey and Pennsylvania Early Termination Fee: Investors Bank will pay all costs incurred to originate this HELOC up to the first $500,000. If the HELOC is terminated within 24 months from date of loan closing, borrower will be required to pay a cancelation/early termination fee of $450.00.
12. New York Early Termination Fee: Investors Bank will pay all costs incurred to originate the HELOC up to the first $500,000. If the HELOC is terminated within 24 months from date of loan closing, borrower will be required to pay a cancelation/early termination fee of $450.00 and reimburse lender the New York State mortgage recording tax fee including the .25% lenders portion of the mortgage recording tax fee.
13. Minimum Credit Advance: There is no minimum draw amount. You may obtain as many credit advance draws as you desire.
14. Appraisal: We may order an appraisal to determine the property’s value and charge you for this appraisal. We will promptly give you a copy of any appraisal, even if your loan does not close. You can pay for an additional appraisal for your own use at your own cost. The Bank will provide a free copy of any appraisal/valuation report upon completion or at least three business days before consummation, whichever is earlier whether credit is extended, denied, incomplete, withdrawn or approved not accepted. For quick access to a copy of your property appraisal/valuation, please provide your e-mail address.
Borrowers e-mail address:
15. Variable Rate Information: Investors Bank Home Equity Line of Credit has a variable rate feature during the draw period; therefore, the annual percentage rate (APR) and the minimum interest payment can change as a result. The interest rate and APR will be at a minimum of Four Percent (4.00%) (the “Floor”) and a maximum of Fifteen Percent (15.00%) (the “Ceiling”).
The Annual Percentage Rate includes only interest. However, an annual fee of $50.00 will be charged on the anniversary of the loan. Periodic adjustments include only interest and no other costs. The annual percentage rate is based on the value of an Index Rate plus/minus an interest rate margin (as shown on page 3) or the “Floor” rate whichever is higher.
The index used is the Prime Rate as published in the Wall Street Journal “Money Rates” on the 15th day of the month. If more than one Prime Rate is published in the Wall Street Journal for that day, the highest Prime Rate will be used. If the index is no longer available, we may choose a new index that is based on comparable information. You will be given notice of any change to the index.
Please ask us for the current index value, margin, discount or premium and annual percentage rate. Interest rate information will be provided on your monthly billing statements.
Page 3 of 4
Rev 4/2020
16. Introductory Rate Offer – A minimum advance of $25,000.00 is required at closing to take advantage of the Introductory Rate. If the initial draw at closing is to pay off an existing Investors Bank loan, the funds will not count towards the required initial draw to benefit from the Introductory Rate Offer.
Introductory Rate – For the first nine (9) months from the closing date, the interest rate and Annual Percentage Rate (APR) will be at 4.00%. This is known as the Introductory Rate. Thereafter, the interest rate and APR will be variable at the Prime Rate plus/minus an interest rate margin (per tiered pricing below). The interest rate and APR will not be lower than Four Percent (4.00%) (the “Floor”) or greater than Fifteen Percent (15.00%) (the “Ceiling”) as described in #15.
If you take advantage of the additional optional variable rate feature for automatic payment debit described below, the Introductory Rate will be at 3.75% for the first nine (9) months from the closing date. Thereafter, the interest rate and APR will be variable and will be adjusted according to the Prime Rate as published in the Wall Street Journal. The interest rate and APR will not be lower than Four Percent (4.00%) (the “Floor”) or greater than Fifteen Percent (15.00%) (the “Ceiling”) as described in #15.
Following the Introductory Offer – The Interest Rate will be Based on Tiered Pricing Loan Amount: Minimum $25,000 – Maximum $750,000
Loan-To-Value LTV: Maximum 75%
Minimum Interest Rate is the “Floor” Rate 4.00% – Maximum Interest Rate is the “Ceiling” Rate 15.00%
New Jersey & Pennsylvania – Interest Rates *Interest Rate Discount – rate discount of .25% is offered for automatic debit from an Investors Bank checking
account
Loan Amount
NJ & PA Tiered Pricing Rate
Without Auto Debit
NJ & PA Tiered Pricing Rate With Auto Debit
$25,000 - $249,999 Prime plus (+) .25% Prime
$250,000 - $750,000 Prime Prime minus (-) .25%
New York – Interest Rates *Interest Rate Discount – rate discount of .25% is offered for automatic debit from an Investors Bank checking
account
Loan Amount
New York Tiered Pricing Rate
Without Auto Debit
New York Tiered Pricing Rate With Auto Debit
$25,000 - $249,999 Prime plus (+) .50% Prime plus (+) .25%
$250,000 - $750,000 Prime (+) .25% Prime
17. Variable Rate Feature For Automatic Payment: If you elect to take advantage of the automatic monthly payment debit option, an interest rate discount of One Quarter of One Percent (.25%) is offered.
The annual percentage rate (APR) will be lower with the discount rate offer than otherwise charged in connection with this loan (refer to the above rate chart).
In the event, the borrower terminates this agreement with the bank, the APR charged on the unpaid principal balance, commencing with the first month thereafter, shall be increased by One Quarter of One Percent (.25%) per annum. The increase will take the form of a higher monthly payment amount.
Page 4 of 4
Rev 4/2020
18. Rate Changes During the Draw Period: During the draw period your annual percentage rate can change monthly. The maximum annual percentage rate (the “Ceiling”) that can apply over the entire term of your credit line will be Fifteen Percent (15.00%). The minimum annual percentage rate (the “Floor”) that can apply over the entire term of your credit line will be Four Percent (4.00%). A Finance Charge will be charged on all loan advances. The Finance Charges begins on the date a loan advance is posted to the Line of Credit by applying the Daily Periodic Rate to the “average daily balance” (including current transactions). To get the “average daily balance” take the beginning balance of the Line of Credit each day, add any new loan advances, and subtract any payments or credit and unpaid Finance Charges.
This provides the daily balance. Then add up all the daily balances for the billing cycle and divide the total by the number of days in the billing cycle. This gives you the “Average Daily Balance”. To determine the Finance Charge for any monthly billing cycle, the average daily balance of the Line of Credit is first multiplied by the Daily Periodic Rate. Then, this product is multiplied by the number of days in the billing cycle. The Daily Periodic Rate is 1/360th of the initial Annual Percentage Rate.
19. Maximum Rate and Payment Example: If you had an outstanding balance of $10,000, the minimum interest monthly payment at the maximum annual percentage rate of 15% would be $125.00. The maximum rate can be reached at the beginning of any billing cycle. Example of payment calculation: $10,000 x 15.00%/12 = $125.00
Historical Example: The following table shows how the annual percentage rate and the minimum interest monthly payment for an outstanding credit line balance of $10,000 would have been changed based on changes in the index over the past 15 years. The index values reflect the prime interest rate as of January 2nd of each year indicated.
This example assumes that a $10,000 advance is taken at the beginning of the first billing cycle and reduced according to the terms of the plan with no subsequent draw taken. The minimum payment represents interest only for the first payment of each year. This example may not reflect all discounted rates being offered.
Year Index (%) Annual Minimum (Prime Interest Rate) Percentage Rate Payment ($)
“Floor” Rate of 4.00% Prime is currently 3.25% as of (03/16/20) Please sign below to acknowledge that you have read the above information. The enclosed copy should be retained for your records. Print Applicant’s Name: Print Co-Applicant’s Name: Applicant’s Signature: Date: Co-Applicant’s Signature: Date:
Page 1 of 4
Rev 4/2020
HOME EQUITY LINE OF CREDIT – DISCLOSURE
Important Information About The Home Equity Line of Credit
Please Read Carefully – Borrower’s Copy
This disclosure contains important information about our Home Equity Line of Credit. It is subject to change at any time. Your terms will be set at the time we receive a signed loan application from you.
1. Availability of Terms: The terms described below outline Investors’ Bank Home Equity Line of Credit. If any of these terms change, other than the annual percentage rate, prior to you entering into the loan agreement, you are entitled to a refund of any fees that you have paid to Investors Bank in connection with your application.
The terms of your loan agreement and note may also include a requirement that your minimum monthly loan payment be deducted automatically from a checking account at Investors Bank.
2. Security Interest: Investors Bank will secure a mortgage lien on your home. You could lose your home if you fail to meet the obligations in the Investors Bank Home Equity Line of Credit Agreement that you will sign, should your loan be approved.
3. Possible Actions: Under certain circumstances Investors Bank can (1) terminate your credit line, require you to pay the outstanding balance and possibly charge you certain legal fees for the collection of the funds due; (2) refuse to make additional extensions of credit; and (3) reduce your credit limit.
You may ask for more specific information concerning when these actions can be taken, which Investors Bank will provide as soon as reasonably possible and before you enter into the loan agreement.
4. Determination of Credit Limit: Investors Bank will consider your ability to repay the loan (principal and interest) by looking at your income, debts, and other financial obligations as well as your credit history. The Bank’s qualifying interest rate is based on the “Floor” rate (4.00%) without any discounts in effect at time of application plus an Interest Rate Margin of One and Three Quarters of One Percent (1.75%).
The “Floor” rate is the minimum interest rate currently agreed-upon by the Lender.
The “Interest Rate Margin” is an interest rate added to the index rate currently used to qualify the Borrower.
5. Minimum Payment Requirements: You can obtain advances on your outstanding credit line for ten (10) years (the “Draw Period”). During the draw period payments will be due monthly. Your minimum interest payment will equal the Finance Charges that accrued on the outstanding balance. Upon the sale or transfer of the property securing the line, the entire outstanding principal balance plus any accrued interest will be due in full. This is referred to as a balloon payment.
6. Minimum Payment Example: On an outstanding credit line advance of $10,000 your minimum interest payment would be calculated as follows:
In this example we are using 30 days at an annual percentage rate of 4.00% which is currently the “Floor” rate.
Example of payment calculation: $10,000 x 4.00%/12 = $33.33
Your minimum interest monthly payment would be, in this example $33.33.
During the interest-only period (the “Draw Period”), the minimum payment will not reduce the principal that is outstanding on your credit line.
After the draw period, you will no longer be able to obtain credit advances and must pay the outstanding balances over fifteen (15) years (the repayment period). Payments of principal and interest will be due monthly.
Page 2 of 4
Rev 4/2020
7. Amortization Rate and Payment: At the end of the draw period in year 11 the interest rate shall be the prevailing 15 year fixed home equity interest rate in effect at that time. You will be notified of your change in rate and new principal and interest monthly payment for the remaining period of your loan 45 days prior to the due date of your new monthly payment. If the index is no longer available, we may choose a new index that is based on comparable information. You will be given notice of any change of index.
8. Property Taxes, Homeowners Insurance and Flood Insurance: Borrower is responsible to maintain property taxes, homeowners’ insurance and flood insurance (if applicable) current during the life of the loan.
9. Fees and Charges: A $50.00 annual maintenance fee will be charged each year on the anniversary of the origination date of the loan. An initial supply of checks will be provided for accessing your credit line. Future checks, if needed, are supplied at no cost to you.
10. New York Properties: Investors Bank will be responsible for the Mortgage Recording Tax fee on loans up to $500,000. (However, on refinancing of existing Investors Bank Home Equity Lines of Credit, the Borrower will be responsible for the Mortgage Recording Tax fee, excluding the .25% lender’s portion.)
11. New Jersey and Pennsylvania Early Termination Fee: Investors Bank will pay all costs incurred to originate this HELOC up to the first $500,000. If the HELOC is terminated within 24 months from date of loan closing, borrower will be required to pay a cancelation/early termination fee of $450.00.
12. New York Early Termination Fee: Investors Bank will pay all costs incurred to originate the HELOC up to the first $500,000. If the HELOC is terminated within 24 months from date of loan closing, borrower will be required to pay a cancelation/early termination fee of $450.00 and reimburse lender the New York State mortgage recording tax fee including the .25% lenders portion of the mortgage recording tax fee.
13. Minimum Credit Advance: There is no minimum draw amount. You may obtain as many credit advance draws as you desire.
14. Appraisal: We may order an appraisal to determine the property’s value and charge you for this appraisal. We will promptly give you a copy of any appraisal, even if your loan does not close. You can pay for an additional appraisal for your own use at your own cost. The Bank will provide a free copy of any appraisal/valuation report upon completion or at least three business days before consummation, whichever is earlier whether credit is extended, denied, incomplete, withdrawn or approved not accepted. For quick access to a copy of your property appraisal/valuation, please provide your e-mail address.
Borrowers e-mail address:
15. Variable Rate Information: Investors Bank Home Equity Line of Credit has a variable rate feature during the draw period; therefore, the annual percentage rate (APR) and the minimum interest payment can change as a result. The interest rate and APR will be at a minimum of Four Percent (4.00%) (the “Floor”) and a maximum of Fifteen Percent (15.00%) (the “Ceiling”).
The Annual Percentage Rate includes only interest. However, an annual fee of $50.00 will be charged on the anniversary of the loan. Periodic adjustments include only interest and no other costs. The annual percentage rate is based on the value of an Index Rate plus/minus an interest rate margin (as shown on page 3) or the “Floor” rate whichever is higher.
The index used is the Prime Rate as published in the Wall Street Journal “Money Rates” on the 15th day of the month. If more than one Prime Rate is published in the Wall Street Journal for that day, the highest Prime Rate will be used. If the index is no longer available, we may choose a new index that is based on comparable information. You will be given notice of any change to the index.
Please ask us for the current index value, margin, discount or premium and annual percentage rate. Interest rate information will be provided on your monthly billing statements.
Page 3 of 4
Rev 4/2020
16. Introductory Rate Offer – A minimum advance of $25,000.00 is required at closing to take advantage of the Introductory Rate. If the initial draw at closing is to pay off an existing Investors Bank loan, the funds will not count towards the required initial draw to benefit from the Introductory Rate Offer.
Introductory Rate – For the first nine (9) months from the closing date, the interest rate and Annual Percentage Rate (APR) will be at 4.00%. This is known as the Introductory Rate. Thereafter, the interest rate and APR will be variable at the Prime Rate plus/minus an interest rate margin (per tiered pricing below). The interest rate and APR will not be lower than Four Percent (4.00%) (the “Floor”) or greater than Fifteen Percent (15.00%) (the “Ceiling”) as described in #15.
If you take advantage of the additional optional variable rate feature for automatic payment debit described below, the Introductory Rate will be at 3.75% for the first nine (9) months from the closing date. Thereafter, the interest rate and APR will be variable and will be adjusted according to the Prime Rate as published in the Wall Street Journal. The interest rate and APR will not be lower than Four Percent (4.00%) (the “Floor”) or greater than Fifteen Percent (15.00%) (the “Ceiling”) as described in #15.
Following the Introductory Offer – The Interest Rate will be Based on Tiered Pricing Loan Amount: Minimum $25,000 – Maximum $750,000
Loan-To-Value LTV: Maximum 75%
Minimum Interest Rate is the “Floor” Rate 4.00% – Maximum Interest Rate is the “Ceiling” Rate 15.00%
New Jersey & Pennsylvania – Interest Rates *Interest Rate Discount – rate discount of .25% is offered for automatic debit from an Investors Bank checking
account
Loan Amount
NJ & PA Tiered Pricing Rate
Without Auto Debit
NJ & PA Tiered Pricing Rate With Auto Debit
$25,000 - $249,999 Prime plus (+) .25% Prime
$250,000 - $750,000 Prime Prime minus (-) .25%
New York – Interest Rates *Interest Rate Discount – rate discount of .25% is offered for automatic debit from an Investors Bank checking
account
Loan Amount
New York Tiered Pricing Rate
Without Auto Debit
New York Tiered Pricing Rate With Auto Debit
$25,000 - $249,999 Prime plus (+) .50% Prime plus (+) .25%
$250,000 - $750,000 Prime (+) .25% Prime
17. Variable Rate Feature For Automatic Payment: If you elect to take advantage of the automatic monthly payment debit option, an interest rate discount of One Quarter of One Percent (.25%) is offered.
The annual percentage rate (APR) will be lower with the discount rate offer than otherwise charged in connection with this loan (refer to the above rate chart).
In the event, the borrower terminates this agreement with the bank, the APR charged on the unpaid principal balance, commencing with the first month thereafter, shall be increased by One Quarter of One Percent (.25%) per annum. The increase will take the form of a higher monthly payment amount.
Page 4 of 4
Rev 4/2020
18. Rate Changes During the Draw Period: During the draw period your annual percentage rate can change monthly. The maximum annual percentage rate (the “Ceiling”) that can apply over the entire term of your credit line will be Fifteen Percent (15.00%). The minimum annual percentage rate (the “Floor”) that can apply over the entire term of your credit line will be Four Percent (4.00%). A Finance Charge will be charged on all loan advances. The Finance Charges begins on the date a loan advance is posted to the Line of Credit by applying the Daily Periodic Rate to the “average daily balance” (including current transactions). To get the “average daily balance” take the beginning balance of the Line of Credit each day, add any new loan advances, and subtract any payments or credit and unpaid Finance Charges.
This provides the daily balance. Then add up all the daily balances for the billing cycle and divide the total by the number of days in the billing cycle. This gives you the “Average Daily Balance”. To determine the Finance Charge for any monthly billing cycle, the average daily balance of the Line of Credit is first multiplied by the Daily Periodic Rate. Then, this product is multiplied by the number of days in the billing cycle. The Daily Periodic Rate is 1/360th of the initial Annual Percentage Rate.
19. Maximum Rate and Payment Example: If you had an outstanding balance of $10,000, the minimum interest monthly payment at the maximum annual percentage rate of 15% would be $125.00. The maximum rate can be reached at the beginning of any billing cycle. Example of payment calculation: $10,000 x 15.00%/12 = $125.00
Historical Example: The following table shows how the annual percentage rate and the minimum interest monthly payment for an outstanding credit line balance of $10,000 would have been changed based on changes in the index over the past 15 years. The index values reflect the prime interest rate as of January 2nd of each year indicated.
This example assumes that a $10,000 advance is taken at the beginning of the first billing cycle and reduced according to the terms of the plan with no subsequent draw taken. The minimum payment represents interest only for the first payment of each year. This example may not reflect all discounted rates being offered.
Year Index (%) Annual Minimum (Prime Interest Rate) Percentage Rate Payment ($)
“Floor” Rate of 4.00% Prime is currently 3.25% as of (03/16/20)
Please retain for your records.
Revised 05/2017
RE-VERIFICATION OF CREDIT HISTORY
AND EMPLOYMENT STATUS DISCLOSURE
This is to advise you that Investors Bank ensures that the quality of every loan it originates meets the Bank’s standards. In order to ensure that every loan meets the Bank’s credit and employment standards, critical data such as credit history and employment status will be re-verified prior to your scheduled loan closing.
It is important for you to know that, once you have submitted a loan application with us, you should maintain your total debt obligations at or below the levels revealed to us during the underwriting of your loan. Material increases in current obligations, potential or new obligations that would affect the initial decision that was made during underwriting, may also affect your loan approval which will cause your closing to be postponed or cancelled.
Print Applicant’s Name Print Co-Applicant’s Name
Applicant’s Signature Co-Applicant’s Signature
Date Date
101 Wood Avenue South, Iselin, New Jersey 08830 SERVICING DISCLOSURE STATEMENT 855-i Bank4U (422-6548)
NOTICE TO FIRST LIEN MORTGAGE LOAN APPLICANTS: THE RIGHT TO COLLECT YOUR MORTGAGE LOAN PAYMENTS MAY BE TRANSFERRED. FEDERAL LAW GIVES YOU CERTAIN RELATED RIGHTS. IF YOUR LOAN IS MADE, SAVE THIS STATEMENT WITH YOUR LOAN DOCUMENTS. SIGN THE ACKNOWLEDGMENT AT THE END OF THIS STATEMENT ONLY IF YOU UNDERSTAND ITS CONTENTS.
Because you are applying for a mortgage loan covered by the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. §2601 et seq.) you have certain rights under that Federal law. This statement tells you about those rights. It also tells you what the chances are that the servicing for this loan may be transferred to a different loan servicer. “Servicing” refers to collecting your principal, interest and escrow account payments, if any. If your loan servicer changes, there are certain procedures that must be followed. This statement generally explains those procedures.
Transfer Practices and Requirements: If the servicing of your loan is assigned, sold, or transferred to a new servicer, you must be given written notice of that transfer. The present loan servicer must send you notice in writing of the assignment, sale or transfer of the servicing not less than 15 days before the effective date of the transfer. The new loan servicer must also send you notice within 15 days after the effective date of transfer. The present servicer and the new servicer may combine this information in one notice, so long as the notice is sent to 15 days before the effective date of transfer. The 15 day period is not applicable if a notice of perspective transfer is provided to you at settlement. The law allows a delay in the time (not more than 30 days after a transfer) for servicers to notify you, upon the occurrence of certain business emergencies.
Notices must contain certain information. They must contain the effective date of the transfer of the servicing of your loan to the new servicer, and the name, address, and toll-free or collect call telephone number of the new servicer, and toll-free or collect call telephone numbers of a person or department for both your present servicer and your new servicer to answer your questions. During the 60-day period following the effective date of the transfer of the loan servicing, a loan payment received by you old servicer before its due date may not be treated by the new loan servicer as late, and a late fee may not be imposed on you.
Complaint Resolution: Section of RESPA (12 U.S.C. §2605) gives you certain consumer rights, whether or not your loan servicing is transferred. If you send a “qualified written request” to your servicer, your servicer must provide you with a written acknowledgment within 20 Business Days of receipt of your request. A “qualified written request” is a written correspondence, other than notice on payment coupon or other payment medium supplied by the servicer, which includes your name and account number, and the information regarding your request. Not later than 60 Business Days after receiving your request, your servicer must make any appropriate corrections to your account, or must provide you with a written clarification regarding any dispute. During this 60-Business Day period, your servicer may not provide information to a consumer reporting agency concerning any overdue payment related to such period or qualified written request.
A Business Day is any date in which the offices of the business entity are open to the public for carrying on substantially all of its business functions.
Damages and Costs: Section 6 of RESPA also provides for damages and costs for individuals or classes of individuals in circumstances where servicers are shown to have violated the requirements of the Section.
Servicing Transfer Estimates: 1. The following is the best estimate of what will happen to the servicing of your mortgage loan:
A. X We may assign, sell or transfer the servicing of your loan sometime while the loan is outstanding. We are able to service your loan,
and we □ will not x haven’t decided whether to service your loan.
B. We do not service mortgage loans, and we have not serviced mortgage loans in the past three years. We presently intend to assign, sell or transfer the servicing of your mortgage loan. You will be informed about your servicer.
2. For all the first lien mortgage loans that we make in the last 12 month period after your mortgage loan is funded, we estimate that the percentage of suchloans for which we will transfer servicing is between:
X 0 to 25% 26 to 50% 51 to 75% 76 to 100%
This estimate we x does □ does not include assignments, sales or transfers to affiliates or subsidiaries. This is only our best estimate and it is not binding.Business conditions or other circumstances may affect our future transferring decisions.
3. We have previously assigned, sold, or transferred the servicing of first lien mortgage loans.
(Signature Not Mandatory) DATE
ACKNOWLEDGMENT OF MORTGAGE LOAN APPLICANT
I/we have read this disclosure form, and understand its contents, as evidenced by my/our signature(s) below. I/we understand that this acknowledgment is a required part of the mortgage loan application.
APPLICANT’S SIGNATURE CO-APPLICANT’S SIGNATURE
Print Name Print Name
DATE
Revised 05/2017
AUTOMATIC DEBIT PAYMENT DISCLOSURE
Please complete and return with your application
I currently have a checking account with Investors Bank. I will establish an automatic loandeduction from the following Investors Bank account:
.** Investors Bank Checking Account Number
I will open a new checking account with Investors Bank and establish automatic loandeduction.**
** An interest rate reduction of one quarter of one percent (.25%) from the APR will apply.
(SPECIAL HOME IMPROVEMENT LOANS not eligible for interest rate reduction.)
I do not wish to open a checking account with Investors Bank and understand that the rateon the loan for which I am applying will be one-quarter of one percent (.25%) higher thanthe currently published rate for fixed-rate loans.
Changes to the above terms may cause your closing to be posponed.
Print Applicant’s Name Print Co-Applicant’s Name
Applicant’s Signature Co-Applicant’s Signature
Date Date
Revised 05/2017
AUTHORIZATION TO RELEASE INFORMATION
1. I/We have applied for a Home Equity loan from Investors Bank. As part of the applicationprocess, Investors Bank may verify information contained in my/our loan application andin other documents required in connection with the loan, either before the loan is closed oras part of its quality control program.
2. I hereby authorized Investors Bank to verify my past and present employment earningsrecords, bank accounts, stock holdings, and any other asset balances that are needed toprocess my mortgage loan application.
3. I further authorize Investors Bank to order a consumer credit report and verify other creditinformation, including past and present mortgage and landlord references.
4. The information the lender obtains is only to be used in the processing of my applicationfor a Home Equity loan.
5. A copy of this authorization may be accepted as an original.
Print Applicant’s Name Print Co-Applicant’s Name
Applicant’s Signature Co-Applicant’s Signature
Date Date
Revised 05/2017
USA PATRIOT ACT INFORMATION
CERTIFICATION
The undersigned certify the following:
1. I/We have applied for a Home Equity loan from Investors Bank. In applying for the loan, I/Wecompleted a loan application; containing various information on the purposes of the loan; theamount, employment, income information, assets, and liabilities. I/We certify that all of theinformation is true and complete. I/We made no misrepresentations in the loan application or otherdocuments, nor did I/We omit pertinent information.
2. I/We understand and agree that Investors Bank reserves the right to change the loan reviewprocess. This may include, but is not limited to verifying the information provided on theapplication with the employer and/or the financial institution.
3. I/We fully understand that it is a Federal crime punishable by fine or imprisonment, or both, toknowingly make any false statements when applying for this loan, as applicable under theprovisions of Title 18, United States Code, Section 1014.
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT
In accordance with Section 326 of the USA PATRIOT Act signed October 26, 2001, the Bank is required to obtain, verify and record information that identifies each person who opens an account or who has signing authority on an account. In some cases, identification will be requested for those individuals banking with the opening of the account.
What this means for you: When you open an account, we will ask you for your name, address, date of birth, tax identification number and other information that will allow us to identify you. We will also ask to see your driver’s license or other identifying documents.
Protection of our customer’s information and identify is the Bank’s pledge to you.
Print Applicant’s Name Print Co-Applicant’s Name
Applicant’s Signature Co-Applicant’s Signature
Date Date
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What You Should Know about Home Equity Lines of Credit | i
Table of contentsHome Equity Plan Checklist ............................................................ 2
What is a home equity line of credit? ........................................ 3What should you look for when shopping for a plan? ................... 4Costs of establishing and maintaining a home equity line ............ 5How will you repay your home equity plan? .................................. 6Lines of credit vs. traditional second mortgage loans .................... 8What if the lender freezes or reduces your line of credit? ............. 10
Where to go for help ............................................................................ A4
More resources ...................................................................................... A7
ii | What You Should Know about Home Equity Lines of Credit
What You Should Know about Home Equity Lines of Credit | 1
If you are in the market for credit, a home equity plan
is one of several options that might be
right for you. Before making a decision, how-ever, you should weigh carefully the costs of a home equity line against the bene ts. Shop for the credit terms that best meet your borrowing needs without posing undue nancial risks. And remember, failure to repay the amounts you’ve borrowed, plus interest, could mean the loss of your home.
2 | What You Should Know about Home Equity Lines of Credit
Home Equity Plan ChecklistAsk your lender to help ll out this checklist.
Basic Features Plan A Plan BFixed annual percentage rate % %
Variable annual percentage rate % %
Index used and current value % %
Amount of margin
Frequency of rate adjustments
Amount/length of discount (if any)
Interest-rate cap and oor
Length of plan Draw period
Repayment period
Initial fees Appraisal fee
Application fee
Up-front charges, including points
Closing costs
Repayment Terms During the draw period Interest and principal payments
Interest-only payments
Fully amortizing payments
When the draw period ends Balloon payment?
Renewal available?
Re nancing of balance by lender?
What You Should Know about Home Equity Lines of Credit | 3
What is a home equity line of credit? A home equity line of credit is a form of revolving credit in
which your home serves as collateral. Because a home o en is a consumer’s most valuable asset, many homeowners use home equity credit lines only for major items, such as education, home improvements, or medical bills, and choose not to use them for day-to-day expenses.
With a home equity line, you will be approved for a speci c amount of credit. Many lenders set the credit limit on a home equity line by taking a percentage (say, 75%) of the home’s appraised value and subtracting from that the balance owed on the existing mortgage. For example:
Appraised value of home $100,000 Percentage x 75% Percentage of appraised value = $ 75,000 Less balance owed on mortgage – $ 40,000 Potential line of credit $ 35,000
In determining your actual credit limit, the lender will also consider your ability to repay the loan (principal and interest) by looking at your income, debts, and other nancial obligations as well as your credit history.
Many home equity plans set a xed period during which you can borrow money, such as 10 years. At the end of this “draw period,” you may be allowed to renew the credit line. If your
4 | What You Should Know about Home Equity Lines of Credit
plan does not allow renewals, you will not be able to borrow additional money once the period has ended. Some plans may call for payment in full of any outstanding balance at the end of the period. Others may allow repayment over a xed period (the “repayment period”), for example, 10 years.
Once approved for a home equity line of credit, you will most likely be able to borrow up to your credit limit whenever you want. Typically, you will use special checks to draw on your line. Under some plans, borrowers can use a credit card or other means to draw on the line.
There may be other limitations on how you use the line. Some plans may require you to borrow a minimum amount each time you draw on the line (for example, $300) or keep a minimum amount outstanding. Some plans may also require that you take an initial advance when the line is set up.
What should you look for when shopping for a plan?
If you decide to apply for a home equity line of credit, look for the plan that best meets your particular needs. Read the credit agreement carefully, and examine the terms and conditions of various plans, including the annual percentage rate (APR) and the costs of establishing the plan. Remember, though, that the APR for a home equity line is based on the interest rate alone and will not re ect closing costs and other fees and charges, so you’ll need to compare these costs, as well as the APRs, among lenders.
Variable interest rates
Home equity lines of credit typically involve variable rather than xed interest rates. The variable rate must be based on a publicly
available index (such as the prime rate published in some major
What You Should Know about Home Equity Lines of Credit | 5
daily newspapers or a U.S. Treasury bill rate). In such cases, the interest rate you pay for the line of credit will change, mirroring changes in the value of the index. Most lenders cite the interest rate you will pay as the value of the index at a particular time, plus a “margin,” such as 2 percentage points. Because the cost of borrowing is tied directly to the value of the index, it is impor-tant to nd out which index is used, how o en the value of the index changes, and how high it has risen in the past. It is also important to note the amount of the margin.
Lenders sometimes o er a temporarily discounted interest rate for home equity lines—an “introductory” rate that is unusually low for a short period, such as 6 months.
Variable-rate plans secured by a dwelling must, by law, have a ceiling (or cap) on how much your interest rate may increase over the life of the plan. Some variable-rate plans limit how much your payment may increase and how low your interest rate may fall if the index drops.
Some lenders allow you to convert from a variable interest rate to a xed rate during the life of the plan, or let you convert all or a portion of your line to a xed-term installment loan.
Costs of establishing and maintaining a home equity line
Many of the costs of se ing up a home equity line of credit are similar to those you pay when you get a mortgage. For example:
A fee for a property appraisal to estimate the value of your home;An application fee, which may not be refunded if you are turned down for credit;
6 | What You Should Know about Home Equity Lines of Credit
Up-front charges, such as one or more “points” (one point equals 1 percent of the credit limit); andClosing costs, including fees for a orneys, title search, mort-gage preparation and ling, property and title insurance, and taxes.
In addition, you may be subject to certain fees during the plan period, such as annual membership or maintenance fees and a transaction fee every time you draw on the credit line.
You could nd yourself paying hundreds of dollars to estab-lish the plan. And if you were to draw only a small amount against your credit line, those initial charges would substantially increase the cost of the funds borrowed. On the other hand, because the lender’s risk is lower than for other forms of credit, as your home serves as collateral, annual percentage rates for home equity lines are generally lower than rates for other types of credit. The interest you save could o set the costs of estab-lishing and maintaining the line. Moreover, some lenders waive some or all of the closing costs.
How will you repay your home equity plan?
Before entering into a plan, consider how you will pay back the money you borrow. Some plans set a minimum monthly pay-ment that includes a portion of the principal (the amount you borrow) plus accrued interest. But, unlike with typical install-ment loan agreements, the portion of your payment that goes toward principal may not be enough to repay the principal by the end of the term. Other plans may allow payment of interest only during the life of the plan, which means that you pay noth-ing toward the principal. If you borrow $10,000, you will owe that amount when the payment plan ends.
What You Should Know about Home Equity Lines of Credit | 7
Regardless of the minimum required payment on your home equity line, you may choose to pay more, and many lenders o er a choice of payment options. Many consumers choose topay down the principal regularly as they do with other loans. For example, if you use your line to buy a boat, you may want to pay it o as you would a typical boat loan.
Whatever your payment arrangements during the life of the plan—whether you pay some, a li le, or none of the principal amount of the loan—when the plan ends, you may have to pay the entire balance owed, all at once. You must be prepared to make this “balloon payment” by re nancing it with the lender, by obtaining a loan from another lender, or by some other means. If you are unable to make the balloon payment, you could lose your home.
If your plan has a variable interest rate, your monthly payments may change. Assume, for example, that you borrow $10,000 under a plan that calls for interest-only payments. At a 10% interest rate, your monthly payments would be $83. If the rate rises over time to 15%, your monthly payments will increase to $125. Similarly, if you are making payments that cover interest plus some portion of the principal, your monthly payments may increase, unless your agreement calls for keeping payments the same throughout the plan period.
If you sell your home, you will probably be required to pay o your home equity line in full immediately. If you are likely to sell your home in the near future, consider whether it makes sense to pay the up-front costs of se ing up a line of credit. Also keep in mind that renting your home may be prohibited under the terms of your agreement.
8 | What You Should Know about Home Equity Lines of Credit
Lines of credit vs. traditional second mortgage loans
If you are thinking about a home equity line of credit, you might also want to consider a traditional second mortgage loan. This
type of loan provides you with a xed amount of money, repayable over a xed period. In most cases, the payment schedule calls for equal payments that pay o the entire loan within the loan period. You
might consider a second mortgage instead of a home equity line if, for example, you need a set amount for a speci c purpose, such as an addition to your home.
In deciding which type of loan best suits your needs, consider the costs under the two alternatives. Look at both the APR and other charges. Do not, however, simply compare
What You Should Know about Home Equity Lines of Credit | 9
the APRs, because the APRs on the two types of loans are g-ured di erently:
The APR for a traditional second mortgage loan takes into account the interest rate charged plus points and other nance charges.
The APR for a home equity line of credit is based on the periodic interest rate alone. It does not include points or other charges.
Disclosures from lenders
The federal Truth in Lending Act requires lenders to disclose the important terms and costs of their home equity plans, including the APR, miscellaneous charges, the payment terms, and infor-mation about any variable-rate feature. And in general, neither the lender nor anyone else may charge a fee until a er you have received this information. You usually get these disclosures when you receive an application form, and you will get addi-tional disclosures before the plan is opened. If any term (other than a variable-rate feature) changes before the plan is opened, the lender must return all fees if you decide not to enter into the plan because of the change.
When you open a home equity line, the transaction puts your home at risk. If the home involved is your principal dwelling, the Truth in Lending Act gives you 3 days from the day the account was opened to cancel the credit line. This right allows you to change your mind for any reason. You simply inform the lender in writing within the 3-day period. The lender must then cancel its security interest in your home and return all fees—including any application and appraisal fees—paid to open the account.
10 | What You Should Know about Home Equity Lines of Credit
What if the lender freezes or reduces your line of credit?
Plans generally permit lenders to freeze or reduce a credit line if the value of the home “declines signi cantly” or, when the lender “reasonably believes” that you will be unable to make your payments due to a “material change” in your nancial circumstances. If this happens, you may want to:
Talk with your lender. Find out what caused the lender to freeze or reduce your credit line and what, if anything, you can do to restore it. You may be able to provide additional information to restore your line of credit, such as documen-tation showing that your house has retained its value or that there has not been a “material change” in your nancial circumstances. You may want to get copies of your credit reports (go to the Federal Trade Commission’s website, at www. c.gov/freereports, for information about free copies) to make sure all the information in them is correct. If your lender suggests ge ing a new appraisal, be sure you discuss appraisal rms in advance so that you know they will accept the new appraisal as valid.
Shop around for another line of credit. If your lender does not want to restore your line of credit, shop around to see what other lenders have to o er. You may be able to pay o your original line of credit and take out another one. Keep in mind, however, that you may need to pay some of the same application fees you paid for your original line of credit.
What You Should Know about Home Equity Lines of Credit | A1 GlossaryGlossary
Annual membership or maintenance fee An annual charge for access to a nancial product such as a line
of credit, credit card, or account. The fee is charged regardless of whether or not the product is used.
Annual percentage rate (APR) The cost of credit, expressed as a yearly rate. For closed-end
credit, such as car loans or mortgages, the APR includes the interest rate, points, broker fees, and other credit charges that the borrower is required to pay. An APR, or an equivalent rate, is not used in leasing agreements.
Application feeFees charged when you apply for a loan or other credit. These fees may include charges for property appraisal and a credit report.
Balloon payment A large extra payment that may be charged at the end of a mort-
gage loan or lease.
Cap (interest rate) A limit on the amount that your interest rate can increase. Two
types of interest-rate caps exist. Periodic adjustment caps limit the interest-rate increase from one adjustment period to the next. Lifetime caps limit the interest-rate increase over the life of the loan. By law, all adjustable-rate mortgages have an overall cap.
Closing or settlement costs Fees paid when you close (or se le) on a loan. These fees may
include application fees; title examination, abstract of title, title
A2 | What You Should Know about Home Equity Lines of Credit
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insurance, and property survey fees; fees for preparing deeds, mortgages, and se lement documents; a orneys’ fees; record-ing fees; estimated costs of taxes and insurance; and notary, appraisal, and credit report fees. Under the Real Estate Se le-ment Procedures Act, the borrower receives a good faith estimate of closing costs within three days of application. The good faith estimate lists each expected cost as an amount or a range.
Credit limit The maximum amount that may be borrowed on a credit card or
under a home equity line of credit plan.
Equity The di erence between the fair market value of the home and
the outstanding balance on your mortgage plus any outstanding home equity loans.
Index The economic indicator used to calculate interest-rate adjust-
ments for adjustable-rate mortgages or other adjustable-rate loans. The index rate can increase or decrease at any time. See also Selected Index Rates for ARMs over an 11-year Period (www.federalreserve.gov/pubs/arms/arms_english.htm) for examples of common indexes that have changed in the past.
Interest rate The percentage rate used to determine the cost of borrowing
money, stated usually as a percentage of the principal loan amount and as an annual rate.
Margin The number of percentage points the lender adds to the index
rate to calculate the ARM interest rate at each adjustment.
What You Should Know about Home Equity Lines of Credit | A3 Glossary
Minimum payment The lowest amount that you must pay (usually monthly) to keep
your account in good standing. Under some plans, the minimum payment may cover interest only; under others, it may include both principal and interest.
Points (also called discount points) One point is equal to 1 percent of the principal amount of a
mortgage loan. For example, if a mortgage is $200,000, one point equals $2,000. Lenders frequently charge points in both xed-rate and adjustable-rate mortgages to cover loan origina-
tion costs or to provide additional compensation to the lender or broker. These points usually are paid at closing and may be paid by the borrower or the home seller, or may be split between them. In some cases, the money needed to pay points can be borrowed (incorporated in the loan amount), but doing so will increase the loan amount and the total costs. Discount points (also called discount fees) are points that you voluntarily choose to pay in return for a lower interest rate.
Security interest If stated in your credit agreement, a creditor’s, lessor’s, or assign-
ee’s legal right to your property (such as your home, stocks, or bonds) that secures payment of your obligation under the credit agreement.
Transaction fee Fee charged each time a withdrawal or other speci ed transac-
tion is made on a line of credit, such as a balance transfer fee or a cash advance fee.
Variable rate An interest rate that changes periodically in relation to an index,
such as the prime rate. Payments may increase or decrease accordingly.
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Where to go for helpFor additional information or to le a complaint about a bank, savings and loan, credit union, or other nancial institution, con-tact one of the following federal agencies, depending on the type of institution.
Federal Reserve Consumer HelpP.O. Box 1200Minneapolis, MN 55480
Federally insured state-chartered bank members of the Federal Reserve System
(888) 851-1920www.federalreservecon-sumerhelp.gov
Consumer Financial Pro-tection Bureau (CFPB)P.O. Box 4503Iowa City, IA 52244
Insured depository institu-tions and credit unions (and their a liates) with assets greater than $10 billion, and nondepository institutions such as mort-gage originators, mortgage brokers and servicers, larger participants of other nancial services products,
private education loan providers, and payday lenders
(855) 411-2372www.consumer nance.gov
O ce of the Comptroller of the Currency (OCC)Customer Assistance Unit1301 McKinney StreetSuite 3450Houston, TX 77010
National banks and federally chartered savings banks/associations
