How to Use a Home Equity Line of Credit

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What to consider when deciding whether to borrow against your home’s value

What is Home Equity?

Home equity is the difference between the appraised value of your home and the balance owed on your mortgage. If you’ve owned your home for a long time or if you’ve paid off a significant portion of your loan, you may be able to borrow money using the equity in your home as collateral.

Line of Credit Benefits

If you’re approved for a HELOC, you are extended a line of credit for a set number of years. You can borrow as much as you need, up to the limit. So, what you actually borrow against your equity can be flexible based on what you’re hoping to accomplish. A line of credit is different from a loan in that the line stays open as ongoing source of funds. As you pay down the line, more is available for you to borrow. It provides you what you need, when you need it.

Remember, borrowing against your home’s equity isn’t always the best option. Make sure you understand the benefits and the potential risks. York Traditions Bank can help! Contact us today and find out if a HELOC makes sense for you!

How can a HELOC be used?
  1. Upgrade and Improve Your Home
    Your needs change as you do. Sometimes, it’s necessary to make updates and improvements to fit your family’s lifestyle. Other times, repairs (like a new roof) are inevitable. Certain improvements, like adding square footage, or updating a kitchen or bath, can increase your property value.
    Not all upgrades increase your home’s value. It’s especially important to think about their costs, how much you’re paying in interest, and potential impact on your home’s worth if you’re using a home equity line of credit to pay for them.
  2. Consolidate Debt
    In many cases, interest rates on a HELOC are considerably lower than other types of loans, like credit cards or car loans. If this is the case for you, a HELOC may be advantageous when consolidating debts. The benefits of using this method of borrowing depend upon your financial circumstances, interest rates on HELOCs are variable. This means that the rates change over time. The quicker you can pay it off, the less you will pay in interest.
  3. Help with the Cost of Higher Education
    If you or a child are headed to college, a HELOC can help manage those costs. You can borrow money to pay tuition upfront, then pay the debt off over the duration of your loan. HELOCs can offer better interest rates than private student loans.

Whenever you are considering borrowing money, it is important to evaluate YOUR needs, lifestyle and financial situation. Discretionary purchases, like weddings or vacations, are not the best reasons to utilize the equity in your home. Always remember, your collateral for a HELOC is your home. Defaulting on a HELOC can negatively impact your credit score or cause foreclosure. Want to talk more?

Home Equity Line of Credit Special as of November 25, 2020
Term APR*
First 6 months 1.79%
First 12 months 1.99%
Then converts to our regular APR** 4.00%
No Fee*** to apply. No Annual Fees.

*Annual Percentage Rate. Promotional rate available for new lines opened from 3/2/2020 thru 12/31/2020. 

Offer subject to change without notice.

Introductory period starts when the line is opened. Offer available for new-to-the-bank home equity lines secured by a 1st or 2nd lien on the borrower’s principal dwelling. Offer also available for existing York Traditions Bank home equity line customers who increase their current credit limit by a minimum of $30,000 and draw $30,000 in additional funds. The $30,000 draw is in addition to any funds that may be advanced on the current line. Current York Traditions Bank customers in the first 36 months of their loan will be required to pay an early termination fee. Maximum combined loan to value of 80%. Payment must be automatically deducted from a York Traditions Bank personal checking account. 60 month draw period. Early termination fee applies if line is closed within 36 months. For qualified borrowers only. Other rates and terms available.

*1.79% APR for 6 months and 1.99% APR for 12 months offers are for line amounts of $50,000-$250,000. Rate is 2.04% APR for 6 months or 2.24% APR for 12 months for line amounts less than $50,000. **Current APR is based on the Wall Street Journal Prime (WSJP) rate plus a margin and is subject to change monthly after introductory period ends. Maximum APR is 18.00%. As of 10/28/2020, current APR tiers are as follows: WSJP + .25% for line amounts of $50,000 or more with a minimum APR of 4.00%, WSJP + .75% for line amounts under $50,000 with a minimum APR of 4.25%. †If appraisal is required, appraisal fee is the responsibility of the borrower. Title insurance required on lines over $250,000. Property insurance is required and flood insurance may be required.

Checking with Interest as of November 25, 2020
Balance Interest Rate APY*
$0.01 to $99,999.99 0.01 0.01
$100,000 & Over 0.01 0.01

*Annual Percentage Yield (APY) is subject to change after account is opened. Fees could reduce earnings. Minimum deposit required to open the account is $100.

Home Equity Loans: 1st Lien as of November 25, 2020
Term APR* Payment**
36 months 3.74% $29.41
60 months 3.74% $18.30
84 months 3.88% $13.61
120 months 3.88% $10.07
180 months 4.13% $7.46

For qualified borrowers only. Other rates and terms available.

*Stated Annual Percentage Rate (APR) is for borrowers with credit score of 740 and above, loans secured by a 1st lien on the borrower’s principal dwelling, the maximum combined loan to value is 80%, and the payment is automatically deducted from a York Traditions Bank deposit account. The payment amount above does not include amounts for taxes and insurance premiums. The actual payment obligation could be greater.

**Payment amount is for $1,000 borrowed. Minimum Loan amount is $5,000.

Home Equity Loans: 2nd Lien as of November 25, 2020
Term APR* Payment**
36 months 3.99% $29.52
60 months 3.99% $18.41
84 months 4.13% $13.73
120 months 4.13% $10.19
180 months 4.38% $7.59

For qualified borrowers only. Other rates and terms available.

*Stated Annual Percentage Rate (APR) is for borrowers with credit score of 740 and above, loans secured by a 2nd lien on the borrower’s principal dwelling, the maximum combined loan to value is 80%, and the payment is automatically deducted from a York Traditions Bank deposit account.

**Payment amount is for $1,000 borrowed. Minimum Loan amount is $5,000.

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