Get the most out of your home's equity.
Home Equity Glossary of Terms
Annual Percentage Rate (APR)
Closing and Closing Costs
The meeting where you review and sign your loan papers.
All of the "other" costs that are assessed when borrowing money. They could include fees for credit reports, land survey, appraisal, title search, title insurance, document preparation, notary, and attorney fees.
Credit History, Credit Insurance, Credit Limit, Credit Report and Credit Score
A borrower’s record of past payment history.
An insurance policy (such as life, disability, or unemployment) that pays the lender the balance of the loan if something happens to the borrower before the loan is paid off. Sometimes the lender adds the entire price of the policy to the amount you are borrowing, and this is very expensive because you pay interest on that amount. Providence Bank does not offer Credit Insurance on Equity financing.
The maximum amount that you can borrow under the Home Equity Loan or Line of Credit.
Credit bureaus collect information about your credit history—where you owe money, how much you owe, your credit cards, and your payment history. Lenders determine whether to give you a loan and how much to charge you based on information in your credit report.
Your credit score is a number that is used by lenders to decide whether to give you credit and at what cost. It is based on information in your credit report.
The act of taking money from a Home Equity Line of Credit.
The amount of time you can withdraw funds from a Home Equity Line of Credit. For instance, a 10-year draw period allows you to withdraw the money for a period of 10 years. After the draw period ends, you are responsible for repaying the loan.
Fixed Rate Loan
Home Equity Loan (HELOAN) and Home Equity Line of Credit (HELOC)
A fixed rate loan, or installment loan, in which your home serves as collateral.
A form of revolving credit in which your home serves as collateral
The base rate for charges that the lender uses to decide how much the annual percentage rate will change over time. Providence Bank uses the Wall Street Journal Prime Rate as published in the Money Rates section.
The monthly payment amount owed to a lender which covers the interest-only portion of the amount borrowed. Your equity does not increase with this type of loan since you are not paying down the principal.
The percentage rate lenders charge you for using their money. The higher the percentage, the more you pay.
Line of Credit
Loan-to-value (LTV) Ratio
Negative Equity, Origination Fee , Predatory Lender and Pre-payment Penalty
When the current market value of a property is less than the amount owed.
A fee that is charged upon closing of a loan.
Lenders who take advantage of borrowers and make loans that the borrowers cannot afford. They may charge very high interest rates or fees, hide costs, or lie about loan terms.
A penalty for paying a loan early before its due date. Providence Bank does not charge a pre-payment penalty on Equity financing.
Principal and Principal & Interest (P&I)
The amount of money that you borrow.
The amount of a Home Equity Loan payment including the principal and the interest. On a Home Equity Line of Credit, the payment is calculated at 1.5% of the principal balance.
Total Amount to Repay