Let’s start off with the basics. What exactly is a Home Equity Loan? A Home Equity loan allows you, the borrower, to take out a loan while using your residence as collateral. To determine how much equity is available from which to borrow, the mortgage balance already attached to your property, along with the current market value of your property, is considered. Equity Loans offered by Aspire Federal Credit Union are limited to ensure that no more than 80% of the total value of the property is mortgaged by the combination of mortgages (existing 1st and/or new equity loan) and are only available on your primary residence.
Property value of $156,250 and a 1st mortgage balance of $100,000
$156,250 (property value) X .80% = $125,000
Subtract $100,000 (1st mortgage balance)
Leaving $25,000 of available equity
Also referred to as a “second mortgage”, these loans are often times used to match the borrower’s mortgage payoff date to retirement date, to achieve a “Mortgage Free” retirement. While paying off a First Mortgage is a popular and smart choice, Home Equity Loans can be used for a variety of things: home improvements, a second (vacation) home, college education, etc.
So if you already have a mortgage, why take out a “second” one, rather than just refinancing into another 1st mortgage? The difference between this loan and a First Mortgage is that First Mortgages have closing costs, while Home Equity Loans (at Aspire) do not. Ultimately meaning, once you make the switch, you’ll save over the life of your loan, with no up front costs to consider. Home Equity Loans are a good option for home owners who have a short amount of time (between five and 10 years) left on their First Mortgage; however, loans can be taken out for longer terms (but the savings tend to be less as you will see in our rates listed below).
These loans are also similar to, but should not be confused with, Home Equity Lines of Credit. Unlike Home Equity Lines of Credit, which have a variable interest rate that can change as the Prime Rate changes and allow you to take multiple advances over a set “draw” period, Home Equity Loans contain a fixed interest rate over the life of the loan, and the loan amount is distributed in one lump sum at closing.
Aspire FCU offers Home Equity Loans for your convenience. With us, you’ll be offered low, fixed rates (meaning that you’re protected when interest rates rise) and a fast application process. With a Home Equity Loan from Aspire, you’ll have the opportunity to lower your payment for the same term OR make the same payments for a shorter term!
Check out our current special rates!
- 5 years – 4.25% (pymt = $465.40) e – $25,000 min.
Rate includes reduction of 2.09% w/ checking & auto pay.
- 10 years – 5.25% (pymt = $539.23) e – $50,000 min.
Rate includes reduction of 1.35% w/ checking & auto pay.
- 15 years – 5.75% (pymt – $834.91) e – $100,000 min.
Rate includes reduction of 1.59% w/ checking & auto pay.
- 20 years – 6.25% (pymt – $735.07) e – $100,000 min.
Rate includes reduction of 1.39% w/ checking & auto pay.
For more information and to apply, call 732-388-0477, Option 2 to speak with a knowledgeable Loan Consultant or visit www.aspirefcu.org to apply online. And hurry – these special rates are only available until July 31, 2011!
*Our best available rates for a maximum of the lesser of 80% LoanToValue (minus 1st mortgage balance) or $250,000 for highly qualified members, with automatic payments made directly from your Aspire FCU checking account. Primary residence only. Other rates/terms may apply based on credit criteria. Members with existing equity accounts are not eligible for these promotional terms. Proof of income will be required as part of our process. State Mortgage Tax, if applicable, is the member’s responsibility. Direct Deposit is required to receive the promotional rate. Rate offers expire July 31, 2011.