Home Equity Line of Credit 101

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What is a HELOC, and how does it provide financial flexibility?

Let’s start with the basics. A Home Equity Line of Credit (HELOC) is an open line of credit based on your home’s available equity. Homeowners are offered a line of credit which can be accessed when they need it during the draw period, which is the amount of time you have to draw funds from that available credit. Generally, a homeowner’s borrowing limit can be about 70-85% of the equity in their home, minus any other outstanding loans against it, such as a primary mortgage. The funds from a HELOC can be used to pay for home improvements, debt consolidation, major life events, and more.

A HELOC often has a lower interest rate and more flexibility than many other types of loans. You only use the money when you need it, and you only pay interest (during the draw period) on what you use. After the draw period of your HELOC has ended, you will enter the repayment period, during which both principal and interest will be due every month.

Benefits of a HELOC:

  • Financial Flexibility
    Homeowners can access the funds from a home equity line of credit to use it however and whenever they need it—like having cash on hand. You could pay for your next home improvement project, fund tuition expenses or pay off student loans, consolidate and pay off loans at a potentially lower rate, fund a life event or unforeseen expense.
  • Save on Fees and Closing Costs
    Unlike the high fees charged by credit card companies for cash advances. Most HELOC lenders do not charge fees when you draw on your available credit. In addition, many lenders offer low or no closing fees.
  • Low Interest-Only Payments
    Because they are secured by your home equity, HELOCs tend to have lower interest rates than unsecured loans like credit cards or personal loans. And, with a HELOC, homeowners pay interest only during the draw period on the amount they draw and only from the date the funds are withdrawn.

Why Bethpage

With a Home Equity Line of Credit from Bethpage, members receive:

  • Zero application fees, zero annual fees, and zero closing costs[1].
  • Financial flexibility to access the funds how you need them and when you need them while making low interest-only payments for the first 10 years[2] (i.e., the draw period).
  • To protect yourself from rising interest rates, Bethpage’s Fixed-Rate Option, gives you the opportunity to convert some or all of your variable-rate HELOC to a fixed rate loan.[3]

Ready to unleash the power of your home’s equity? Apply Now!

[1] 1 Closing costs for the first $500,000 will be paid by Bethpage Federal Credit Union (Bethpage), but must be repaid by the borrower(s) if the HELOC is closed within first 36 months of account opening. These fees generally range between $500.00 and $15,000.00 depending on the line amount, property value, location, and/or property type. Line amounts over $500,000 may be available on a case-by-case basis to qualified applicants, are not eligible for the discounted introductory rate at any time, and the borrower(s) will be responsible for mortgage-related taxes and title insurance costs on the line amount over $500,000 (up to the approved credit limit). The total third party fees generally range between $500.00 and $60,000.00 depending on the line amount, property value, location, and/or property type. Property insurance (including flood insurance, if applicable) is required.

The Annual Percentage Rate (APR) is as low as 2.99% APR fixed for 12 months with a variable rate of 3.50% APR thereafter as of . Rates are based on a borrower’s primary residence, a maximum CLTV of 65%, a minimum initial draw of $25,000 taken at HELOC account opening, and automatic transfers from a Bethpage personal savings or checking account. The introductory APR is fixed for one year (twelve months). After one year, the APR is variable based on the U.S. Prime Rate as published in the Wall Street Journal, plus a margin. The minimum floor APR is 3.25%. HELOCs are variable rate products and rates may not exceed the maximum legal limit for Federal credit unions (currently 18%). The Prime Rate as of = %. Not all applicants will qualify for the lowest rate and may be offered credit at higher rates based on creditworthiness and other factors.

To obtain an introductory rate, borrower must meet credit and loan program requirements, including (but not limited to): 1) maximum Combined Loan-to-Value (CLTV) of 75%, 2) borrower must take an initial draw of $25,000 and maintain this balance for 12 months, 3) borrower must have automatic transfers from a Bethpage personal savings or checking account for the monthly Home Equity Line of Credit (HELOC) payments, and 4) borrower must not have had a previous introductory rate for a Bethpage HELOC within the past five years. The introductory rate applies to the variable line in use only and not applicable to any Fixed-Rate Loan Option. Loan amounts over $500,000 are not available for the introductory rate

[2] Interest-only payments apply to the variable rate line in use only and is not applicable to any Fixed-Rate Loan Option.

[3] A Fixed-Rate Loan Option (FRLO) allows you to convert an outstanding variable rate HELOC balance(s) to a fixed rate loan(s), which results in fixed monthly principal and interest payments at a fixed interest rate. A FRLO is optional and is available at the time of disbursement (account opening), or during the 10-year Draw Period. Borrowers may only have a maximum of three (3) FRLOs open at any one time. The minimum amount for each FRLO is $10,000. The minimum loan term is 5-years, and the maximum term cannot exceed the account maturity date. If you choose to convert any portion of your balance to a FRLO, the APR will be the U.S. Prime Rate as published in the Wall Street Journal that is in effect at the date of conversion, plus a margin. The margin applied will be based on your credit history and CLTV ratio at the time of application and the term selected for the FRLO.

Rates and terms are subject to change without notice. All offers of credit are subject to credit approval requirements and applicants may be offered credit at higher rates and other terms. Loan-to-Value (LTV) and/or Combined LTV (CLTV) restrictions apply. Hazard insurance is required on all loans secured by real property (flood insurance may also be required where applicable). Consult a tax professional regarding the potential deductibility of interest. Bethpage does not currently offer HELOCs in Texas. Membership at Bethpage is required by opening a minimum $5 share savings account at or prior to HELOC account opening.