frequently asked questions (faq)

• What is “Home Equity”?
• What is a “Home Equity Loan”?
• What type of fees are involved?
• What type of homes are eligible?
• What is a Loan-to-Value ratio?
• Is a Home Equity Loan for you?

What is “Home Equity”?
Home equity refers to the money you have paid toward the value of your home. The more money you pay toward your mortgage balance increases the amount of equity you have in your home. For example, if your home is appraised at $300,000, and your mortgage has a balance of $200,000, your home’s equity equals $100,000. Other factors can affect how equity is calculated, including whether you have any liens or a second mortgage.

What is a “Home Equity Loan”?
A Home Equity Loan (or Line of Credit) is a way to borrow money based on the amount of equity you have in your home. This is a secured loan, which uses your home as collateral. A home equity loan should be evaluated carefully before applying, because you may put your home at risk if you are late or cannot make your monthly payments.

What type of fees are involved?
When you take out a home equity line of credit, you pay for many of the same expenses as when you financed your original mortgage. These fees may vary between different financial institutions. These expenses can add substantially to the cost of your loan, especially if you ultimately borrow little from your credit line.

As a member-owned credit union, we are able to offer our Home Equity products without the typical fees other lenders charge. For example, we do not charge an application fee, nor do we charge an escrow fee or credit report fee. Also, we do not charge prepayment penalties. For a list of applicable fees, please visit our rate page.

What type of homes are eligible?
We offer Home Equity Loans for primary residences in California, including one- to four-unit homes, condos and townhomes. Mobile homes are not eligible.

What is a Loan-to-Value ratio?
Loan-to-Value ratio (or LTV) refers to the difference between the balance of your mortgage and the appraised value of your house. Other factors can affect your ratio including whether you have any liens or a second mortgage.

Is a Home Equity Loan for you?
If you need to borrow money, home equity lines may be one useful source of credit. Initially at least, they may provide you with large amounts of cash at relatively low interest rates. And they may provide you with certain tax advantages unavailable with other kinds of loans. (Check with your tax adviser for details.)