Home Equity Loans or Lines of Credit

Your Legacy Federal Credit Union has two home equity products available.

A Home Equity Loan, a closed-end form of credit, is similar to a home loan or a vehicle loan. The loan includes a fixed interest rate, a specified repayment term, and a fixed payment amount. The loan is disbursed in entirety three business days after the loan closes. This legally-required three day time period is known as the “Right of Rescission” or “Right to Cancel.”

This type of loan is ideal for a variety of purposes. Two common purposes are bill consolidation and home improvement.  Sometimes a Home Equity Loan also serves as a substitute for a different type of loan because the interest rate, term, and/or monthly payment amount with a Home Equity Loan may be more favorable than an alternative form of credit.

Your Legacy Federal Credit Union’s Home Equity Loan  includes a maximum repayment term of ten years and a combined loan-to-value ratio of 90%. A combined loan-to-value is determined by adding together the current unpaid balance of the 1st mortgage on a borrower’s home and the home equity loan amount (the 2nd mortgage) and dividing the combined mortgages total into the appraised value.

Oftentimes, we have provided substantial savings to a borrower whose current balance is low in comparison to the current value of the home, but the existing loan has a relatively high interest rate. By refinancing the higher interest rate loan into a Your Legacy Federal Credit Union Home Equity Loan, we can lower the interest rate with associated closing costs far below that of a conventional first mortgage. This refinance successfully provides substantial savings to the member. Lower interest rate, low closing costs, with an easy process. What could be better?

Your Legacy Federal Credit Union also has a Home Equity Line of Credit (HELOC) available. As with a Home Equity Loan, the three day Right of Rescission is applicable; however, the maximum combined loan-to-value ratio in connection with a Home Equity Line of Credit is 85%.

This type of credit differs from a Home Equity Loan in that it is a revolving, open-end form of credit, similar to a credit card. As with a credit card, a HELOC provides the borrower with immediate access to cash. With this product, a credit line with a specified credit limit is established. Borrowers can make advances or “draws” in any amount (minimum $300) up to the credit limit. After a 10-year “draw period,” the line converts to the repayment phase. Future advances are not available in the “repayment period,” and the unpaid balance is repaid over a 15-year term.

In the event the borrower does not wish to have his or her Home Equity Line of Credit go into the repayment phase, the balance is normally refinanced into a new HELOC, and the advance feature is again available by way of the new Home Equity Line of Credit. HELOCs are most commonly used for bill consolidation or home improvements, but, as with a home equity loan, can be used for other purposes in the event more gain can be realized from a home equity line of credit as compared to an alternative form of credit.

Your Legacy Federal Credit Union’s Home Equity Line of Credit includes a variable interest rate and a small set-up fee. Some lenders’ home equity line of credit product includes an annual fee. Ours does not.

Convenient electronic forms of repayment are available with either loan product.

Please call or contact us to further explore the benefits of a home equity loan or line of credit. Both provide opportunity to put money back in your pocket in the form of interest savings and lesser fees.

Home Equity Disclosure