What is a Home Equity Loan?
A Home Equity Loan is a type of loan that allows you to borrow money against the value of your home - you use your home as collateral for the loan.
What is the difference between a Fixed-Rate Home Equity Loan and a Home Equity Line of Credit?
A Fixed-Rate Home Equity Loan is a loan that is secured by your home or property. The proceeds of the loan are paid to you in one lump sum and can be used for anything you wish. You then make scheduled payments to Tyndall Federal over the term of the loan. Your payment and interest rate remain the same throughout the life of the loan.
A Home Equity Line of Credit (HELOC) is also a loan that is secured by your home or property. However, the loan is similar to a credit card in that you are given a maximum credit limit based on the value of your property and your loan request. You then take advances on it as you need to, up to the established credit limit. Your loan payments are then based on your outstanding balance. You can continue to borrow against your HELOC any time during the initial 5-year Draw Period, as long as you have an available credit limit. Your rate on your HELOC is variable and may change over the life of the loan.
What type of property can I use to obtain a Home Equity Loan?
You may be able to obtain a Tyndall Home Equity Loan using:
- Single Family Residences
- Secondary Residences
- Rental/Investment Property
- Unimproved Land
- Mobile Home & Land
Mobile Home and Land and Unimproved Land loans may only be secured by a Fixed-Rate Home Equity Loan.
What personal information – employment, income, debts, etc. – do I need to have available to apply for a Home Equity Loan?
Information about the length and place of your present employment (if present employment is less than 2 years, previous employment information is required), and your gross income will be needed to apply for a Home Equity loan. Depending on your financial circumstances, proof of income (pay stub and/or tax returns) may be required.
What additional information or documents about the property do I need to have available when I apply for a Home Equity Loan?
The following information and or documents are not required to apply for a loan; however, if approved, having the information and documents readily available will help us to expedite your loan request.
For a refinance, a Warranty Deed or Quit Claim Deed, verification of homeowner's insurance, existing mortgage statement(s), and if applies, a copy of the mobile home title(s) and the Real Property (RP) sticker numbers.
If the loan request is for a purchase, a Sales Contract/Agreement, the name and phone number of the title company that will be closing the transaction (usually chosen by the seller), and if applies, a copy of the mobile home title(s) and the Real Property (RP) sticker numbers.
Why should I consider a Home Equity Loan instead of another type of loan?
Generally, Home Equity Loans have a lower interest rate than other loan types. They also have longer terms available, which tend to make your monthly payment lower. That all equates to more money in your pocket each month. In addition, you can use the proceeds of the loan any way you choose; you are not required to spend the money for any particular purpose. Finally, there are often tax benefits to a Home Equity Loan. Please consult your tax advisor to discuss these potential benefits.
Are there any additional costs involved in getting a Tyndall Federal Home Equity Loan?
While many financial institutions charge fees such as application fees, loan origination fees, and annual fees, Tyndall does not. There are some fees that are unavoidable, however. Closing Costs, which include items such as an appraisal fee, flood certification, title work, and document fees, may be assessed. Tyndall Federal may pay these fees for you (up to $500). Check with your Lending Specialist.
Once the loan is approved, can I change my mind?
As a matter of fact, you can. You may withdraw your application any time after it has been approved before any services (i.e. appraisal, flood certification and title search) have been ordered, without accruing any costs.
If you are using your primary residence as collateral, you will have a 3-day "Right of Rescission," which starts the day after you sign closing documents. If you wish to cancel the loan, you must sign the "Notice of Right to Cancel" document in the section marked, "I wish to cancel", and return it to any Tyndall branch. This 3-day "Right of Rescission" is required by law to allow you time to be certain that you want to use your primary residence as collateral for the loan. If you change your mind during that 3-day period, the loan is not funded, but you still may be responsible for any closing costs that were incurred to that point.
If you are not using your primary residence, you can still change your mind up to the loan closing, but you may still be responsible for any closing costs that were incurred to that point.
What does LTV mean?
LTV stands for Loan-To-Value. It is basically the value of your property compared to the amount of your loan. To calculate your LTV percentage, divide the amount of your Home Equity Loan by the value of your property and multiply it by 100. For example, if you are asking for a $50,000 loan against property worth $200,000, your LTV would be 25%.
If you already have a first mortgage on your property, the LTV of the property is the total of your first mortgage and your Home Equity loan divided by the value of the property.
Will I have to get an appraisal on the property? If so, is this something I have to arrange myself?
An appraisal must be done in order to determine the value of your property. However, in many cases, a Tyndall Representative can make that determination without a formal appraisal. If a full appraisal is needed, we will arrange it.
Do I have to have flood insurance? I have never had a problem with flooding.
As part of the application process, we order a flood certification on your property. If the flood certification indicates that your property is in a designated flood zone, proof of flood insurance is required in order to obtain the Home Equity loan.
If I decide to consolidate some of my credit card bills with the money from the Home Equity Loan, do you mail the checks for me or do I have to do it myself?
We will cut checks payable to the creditors; however, when your loan is funded, we can either mail the checks to you to mail to your creditors or you can pick them up at a branch. Please let your Financial Sales Representative know which option you choose before the loan is funded.
If I decide to pay off some of my credit cards with the money from the Home Equity Loan, do I have to close the credit card accounts?
That will likely depend on your individual financial circumstance. If closing those credit cards was a consideration in approving you for the Home Equity Loan, they will have to be closed. If that was not a concern, you may want to pay them off and leave them open to keep your credit history intact.
Is a Home Equity Loan considered a second mortgage?
If you have an existing mortgage which you are not paying off, the Home Equity loan is considered a second mortgage; however, if you do not have an existing mortgage, the Home Equity loan will be a first mortgage.
I already have a Tyndall Federal Home Equity Loan on my property and now I want to sell it. Can I do that?
Yes, you can. You must just ensure that your Home Equity Loan is paid in full before Tyndall's lien on the property is released.