Home Equity Line Of Credit Program Disclosure
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IMPORTANT TERMS OF OUR HOME EQUITY SECURED LINE OF CREDIT
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This disclosure contains important information about our Home Equity real estate secured open-end line of credit. You should read it carefully and keep a copy for your records.
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Availability of Terms: All of the terms described are subject to change prior to a final decision on your loan application. If any of these terms change (other than the annual percentage rate) and you decide, as a result, not to enter into a Loan Agreement with us, you are entitled to a refund of any fees that you paid in connection with your application.
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Security Interest: The line of credit will be secured by a Deed of Trust on your home. Lien position can be a first or second. You could lose your home if you do not meet the obligations in your Loan Agreement with us.
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Possible Actions: We can terminate your line of credit and require you to pay us the entire outstanding balance in one payment and also charge you certain fees for any of the following reasons:
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- You engage in fraud or material misrepresentation in connection with this line of credit.
- You do not make payments as scheduled.
- The security for the line of credit is impaired.
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We can also refuse to make additional extensions of credit, or reduce your credit limit, if:
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- The security is worth significantly less than its value at the time you applied for the line of credit.
- Your financial circumstances have materially declined.
- You are in default in a material obligation under the Loan Agreement.
- Government action prevents us from continuing to use the annual percentage rate formula or making further loan advances under the Loan Agreement terms.
- A governmental agency takes some action that has the effect of impairing our security interest in your home, such as the imposition of a tax lien.
- The maximum annual percentage rate provided under the variable rate formula in the Loan Agreement is reached.
- A regulatory agency advises us that further extensions of credit would be unsafe or unsound under the circumstances.
- Ten years have passed since the signing of the Loan Agreement (unless the Bank, at our sole discretion, decides to extend the line of credit for an additional term).
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The Loan Agreement allows us to make certain changes such as in the interest rate or on the occurrence of certain events such as your default.
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Minimum Advance; Draw and Repayment Periods: You are not required to take an initial advance when you establish your line of credit. You can obtain loan advances up to your credit limit for ten years. This ten year period is called the draw period. A fifteen year repayment period will follow the draw period.
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Minimum Monthly Payment Requirements: Your minimum monthly payment varies with changes in the interest rate and with the amount borrowed. During the draw period, the minimum monthly payment will equal interest only. During the fifteen-year repayment period, the minimum payment will be fully amortized at an amount sufficient to pay off principal and interest at the then current interest rate over the number of months remaining in the repayment period.
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Minimum Payment Example: If you made only the minimum monthly payments and took no other credit advances, it would take 25 years to pay off a credit advance of $10,000.00 at an initial ANNUAL PERCENTAGE RATE of 6.25%. During the draw period, you would make 120 monthly interest only payments of $51.37 at an ANNUAL PERCENTAGE RATE of 6.25%, provided the rates remained constant. During the repayment period, you would make 180 payments of principal and interest. The repayment period payments would be $85.78 if the ANNUAL PERCENTAGE RATE remained constant at 6.25%. Increases in the interest rate during both the draw and repayment periods will generally increase your monthly payment.
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Fees and Charges: To open and maintain a line of credit, you must pay certain fees and charges. The following fees must be paid to us:
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You will pay an origination charge of $800.00 to Kaiser Federal Bank and you will pay our actual costs for title review, appraisal, flood review, credit report, escrow closing costs, and recording costs, which are estimated to be between $730.00 and $3,000.00. If you withdraw your application within three days or within six days of the date on which we mailed this disclosure to you, any fees you paid to establish your line of credit are refundable.
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You may request an itemization of fees, and one will be given to you in any event when the line of credit is established.
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There is no annual fee for this line of credit.
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You must carry insurance on the property that secures this line of credit.
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Tax Deductibility: You should consult a tax advisor regarding the deductibility of interest and other charges under this line of credit program.
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Variable Rate Feature: This line of credit has a variable rate feature, and the annual percentage rate and minimum monthly payment can change as a result. The annual percentage rate includes only interest. Other costs are not included.
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Initials ____ _____
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Page 1 of 2 |
Revised February 2010
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Home Equity Line Of Credit Program Disclosure
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The annual percentage rate is based on an index. The index is the highest commercial prime rate correctly published in the Wall Street Journal, Western Edition, on the last business day of each month.
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To determine the annual percentage rate that will apply to your line of credit, we add a margin to the index. The margin we assign may depend on the loan-to-value ratio on your property, your credit history, and other factors we may consider. The addition of the index to the margin is called the variable rate formula.
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Ask us for our current index rate, margin and annual percentage rate. After you open a line of credit, rate information will be provided on periodic statements that we send you.
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Rate Changes: Except during any period when we are offering a promotional rate, the annual percentage rate can change every month on the first calendar day of the month. If we are offering a promotional fixed rate, we will tell you, in writing, the rate and the time for which it will be effective. Your ANNUAL PERCENTAGE RATE cannot fall below 3% or the margin (the "floor"). In no event can the interest rate exceed 18% ANNUAL PERCENTAGE RATE (the "ceiling") during the draw or repayment periods. If your line of credit has a fixed introductory rate, the "floor rate" will be equal to the index plus margin in effect at the time your line of credit was opened and not the fixed introductory rate. Ask us for the current limitations applicable to this line of credit program. If an introductory fixed rate is offered, your rate will adjust to that obtained applying the variable rate formula at the end of the introductory period.
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Maximum Rate and Payment Examples: If you had an outstanding balance of $10,000.00 with an initial ANNUAL PERCENTAGE RATE of 4.00%, and the ANNUAL PERCENTAGE RATE reached a hypothetical maximum of 18% during the draw period, your interest only payment would be $147.95. During the repayment period, the maximum monthly payment on a $10,000.00 balance at a hypothetical maximum ANNUAL PERCENTAGE RATE of 18% would be $161.17. This maximum annual percentage rate could be reached at any time during the draw or repayment periods, including the first day of the month following the month in which the line of credit is opened. If we are offering a promotional fixed rate, this maximum annual percentage rate could be reached at any time after the promotional period ends, including the first scheduled rate adjustment.
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Variable Rate Example: The following table shows how the annual percentage rate and the minimum monthly payments for a single $10,000.00 credit advance would have changed based on changes in the index over the last 15 years. The index values are from January of each year. While only one payment amount per year is shown, payments would have varied during each year.
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The table assumes that no additional credit advances were taken and that only the minimum payment was made each month. It does not necessarily indicate how the index or your payments would change in the future. The margin is one used recently.
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Year
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Index
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Margin
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Annual
Percentage
Rate
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Minimum
Monthly
Payment
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1996
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8.50
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3
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11.50
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$94.52
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1997
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8.25
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3
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11.25
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$92.47
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1998
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8.50
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3
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11.50
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$94.52
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1999
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7.75
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3
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10.75
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$88.36
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2000
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8.50
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3
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11.50
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$94.52
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2001
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9.50
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3
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12.50
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$102.74
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2002
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4.75
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3
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7.75
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$63.70
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2003
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4.25
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3
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7.25
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$59.59
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2004
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4.00
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3
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7.00
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$57.53
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¹Draw Period
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2005
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5.25
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3
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8.25
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$67.81
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²Repayment Period
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2006
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7.25
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3
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10.25
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$109.06
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2007
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8.25
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3
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11.25
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$115.30
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2008
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7.25
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3
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10.25
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$109.06
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2009
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3.25
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3
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6.25
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$85.78
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2010
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3.25
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3
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6.25
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$85.78
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¹During the draw period, payments equal interest only.
²During the repayment period, payments are fully amortized.
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A copy of this disclosure is part of the Loan Agreement.
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Borrower Signature
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Date
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Borrower Signature
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Date
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Co-Signer Signature
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Date
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Page 2 of 2 |
Revised February 2010
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| Greene & Allison LLP. All rights reserved |
