This type of loan is secured by real estate and is advanced by the borrower when he/she decides to use the loan funds. Interest accrues only on the current principal balance, not the unused portion of the line.
How do I use my Home Equity Line?
There are two accounts involved in the Peoples Home Equity Line. A special "equity" checking account and the loan account. The proceeds of the loan are held in reserve and are not automatically added to the checking account balance. In fact, this checking account will have a zero balance. You can activate the loan by overdrawing the equity checking account by writing a specially printed check that is intended for the home equity account only. The overdraft will cause funds to be advanced from the loan and deposited into the equity checking in the exact amount necessary to bring the checking account to a zero balance.
Keep in mind that checks must be in the amount of $250.00 or more on your home equity line. Checks will only be honored against loan that are current or less than 30 days past due.
How much are my payments?
There are two types of repayment during the term of your Home Equity Line. The first type takes place during the initial five years of your loan called the "draw period". During the draw period you make advances as necessary and you will be billed monthly for only the interest that accrues on the loan.
During the second phase, the "repayment period", no further advances will be permitted and your payments will be 1/120th of the principal balance at the end of the draw plus monthly accrued interest. The repayment period is ten years.
You may make unscheduled principal payments at any time during the draw and repayment periods without penalty.
How are payments made?
You can make the monthly payments by mail or in person, or have them automatically deducted from your Peoples State Bank savings or checking account separate from the equity account tied to the line of credit. If you decide to have payments drafted from a regular checking that has Redi-Reserve, funds will not be advanced from the Redi-Reserve to make the home equity loan payment.
Each month a statement of the home equity activity will be mailed to you. Following the listing of equity checks drawn against the checking is a summary of the loan including the balance, finance charge and all activity on the loan since the last statement. The final page shows the minimum payment and due date. If you have elected to have these payments withdrawn from and account automatically, deduct the payment amount (on the final page of the statement) from your savings or regular checking balance on the due date.
When are my payments due?
As long as there is a balance on the loan, one payment will be due each month after the cycle date. The cycle date of the Home Equity Line at the top of your contract and is the same date that your statement is "cut" or produced. Statements and bills are produced the night of each cycle date. The actual due date of the Home Equity Loan is 15 days after the cycle date.
Early payments, those made before or on the loan cycle date, will be accepted as a principal reduction and not a regular payment. For instance, if your loan cycle date is the 15th of the month and you make a payment on the 13th of the same month, the entire payment will be accepted as a principal reduction and you will be billed for the minimum payment during statement production on the night of the 15th. In this situation, the loan balance is reduced but the monthly payment requirement is not met.
Your Home Equity balance can be paid off at any time. Please contact the bank and we will calculate the correct figure with interest through the date you intend to make your payoff. If you wish to close the line permanently, please be sure to advise the person quoting your payoff and send us a written request to close the line.
Is there an annual fee?
An annual fee of $25.00 is assessed on each Home Equity Line.
Can this loan be insured?
Individual or joint life insurance coverage is available for a monthly premium. Contact one of our offices for the current monthly rate.
What is the interest rate charged on the Home Equity Line?
Prime rate plus 1.50%, can change daily. "Prime Rate" refers to the highest Prime Rate as published in the "Money Rates" table of The Wall Street Journal.
Is there an appraisal fee associated with the Home Equity Line?
Yes. The current appraisal fee is $250.00.
What are the underwriting requirements?
Maximum loan to value ratio: 75%, Minimum Line: $5,000.00, Maximum Line: $50,000.00, Search required if less than $25,000.00, Attorney's certification if $25,000.00 to $50,000.00, Collateral: Personal Residences Only.