Home Equity FAQs

Your user-friendly guide to the ins and outs of these popular loans.

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Get details, definitions and repayment guidelines.

Find out whether a line of credit or traditional loan best fits your needs.

Home Equity borrowing comes in two forms - a traditional lump sum loan or a revolving credit line.

Both offer attractive interest rates, but there are significant differences. This FAQ can help you determine which loan type works best for you.

Home equity loans provide you with a lump sum, which is typically repayable in equal monthly installments over the term of the loan. A HELOC is more flexible, because -- like a credit card -- it's a form of "revolving" credit: You can use as much or as little of that credit as you want and only pay interest on the outstanding balance. You can borrow, repay, and re-borrow up to your established limit.
Yes, HELOCs do have variable rates, meaning your interest rate could rise or fall. The HELOC rate is based on the Prime Rate. If the Prime Rate increases over your start rate, your interest rate will increase as well. These increases would adjust quarterly. Our HELOCs have a lifetime rate cap of 18%, so your rate will never be higher than this. Your HELOCs start rate is your floor rate, so your rate would not go lower than what you started with.
During your 15 year "draw" period, you will pay interest only on the HELOC amount you are using, though you're free to pay down the "principal" (the amount you've borrowed) too. When the draw period ends, you will enter a 10 year "repayment" period.  During that time, you will not be able to borrow anymore, and you will be able to use that time to pay down the principal and the interest.
The repayment period amortizes the remaining unpaid principal balance and the interest due over the 120-month repayment period. The rate is still variable during the repayment period, which means it can adjust quarterly, but the floor and ceiling caps still apply.
It depends on your mortgage balance and current equity. Equity is measured by calculating how much your property is worth, then subtracting what you owe on your mortgage. VCCU HELOCs have a minimum loan amount of $20,000 and a maximum amount of $350,000. You can borrower up to 75% of your home’s appraised value, up to $350,000. If VCCU is the 1st mortgage holder, you may borrower up to 80% on a HELOC.
We also offer HELOCs for second homes.
We do not charge closing costs, application fees or annual fees. Non-Initial draw fee of $500 if minimum advance is Less than $10,000.
No, our HELOCs do not have prepayment penalties, but they do have an Early Termination Fee of $500 if the HELOC is closed within the first 36 months.
The best way to apply for our HELOC is through our online application. Once you have completed your application, the next step would be to upload your most recent pay stub(s), your most recent W-2(s), a copy of your recent mortgage statement and your current hazard/property insurance statement. A HELOC Specialist will get in touch with you regarding additional information.