A Home Equity Line of Credit* is, like the name suggests, a line of credit secured by the equity in your home. Once the line of credit is established, you can borrow as much as you need within the limit at any time during the term.* It’s a great option for ongoing or unexpected expenses, and applying is easy.
A Home Equity Line Of Credit*, or HELOC, is not just for your home expenses. The line of credit can be used for any purpose. There are many compelling reasons why a HELOC may a perfect fit:
1. Financial Security, Prepare for the Unimaginable
Without a HELOC in place, the only way to access the equity in your home might be to sell it. This can take time you may not have. With an established HELOC, you can access the equity in your home when you need it most.
2. Prepare for the Unexpected
Life always throws a curveball. New air conditioner, new roof, major damage to your home or vehicle, or a surprise expense like tuition or taxes. These always come at the worst possible time.
With a HELOC in place, you are ready to pay these expenses anytime, without the need to search for funding at the last minute.
3. Tax Advantages
In some cases, there are tax advantages associated with a home equity line of credit. Imagine paying for updates to your home and being able to deduct the interest as you do on a home loan. Deductibility limits may apply. You should consult your tax professional to see what specific tax advantages apply to your situation.
4. Consolidation
Interest rates on HELOCs are slightly higher than a first mortgage but much lower than credit cards and other types of consumer loans. Consolidating high-interest debt is one of the most popular uses for a HELOC.
5. Remodel
If you have a project that will take six months to complete, you’re likely to need only 25% to 35% of the total loan amount upfront. The rest will be paid in stages as the project progresses. If you choose a signature loan, second mortgage, or cash-out refinance, you begin paying interest on the entire amount borrowed immediately.
With a HELOC, you only pay interest on the money you are using. Your interest savings can be significant. You can also benefit from a HELOC when the exact cost of a project is unknown in advance.
How do I apply for a HELOC?
You can apply for a HELOC online, by phone, or in a La Cap branch.
Are there restrictions on which properties are eligible?
Yes. HELOCs are available for properties that are:
Also, all vested owners of the property will need to sign at the loan closing.
Can a HELOC be on a rental property I own?
The member must reside in the property. It can be Single Family, 1-4 detached Single Family residence, Attached Single Family, Condo, Townhouse, or Co-Op.
Can I do a HELOC on my home in Texas?
No. We only do HELOCs in Louisiana.
What are the limitations on HELOC amounts?
The minimum loan amount on the HELOC is $10,000, AND the maximum loan amount is $250,000.
Is an appraisal required?
An appraisal will be required if no AVM (Automated Valuation Model) is available or there are extenuating circumstances related to the property (i.e., necessary repairs, etc.). If an appraisal is needed, you will pay a $595 appraisal fee upfront. Outside appraisals are not accepted.
Is debt protection available for HELOCs?
The HELOC can be protected in case of a medical emergency. Debt protection is available for this product, and there are many available options.
What is the draw period?
The HELOC has a 5-year draw period with a repayment term of up to 10 years.
What are the limitations on HELOC advances?
Advances are limited to six draws per quarter year and are required to be a minimum of $1,000 per draw.
When is my payment due?
The HELOC payment is due on the last day of each month.
How do I make payments on my HELOC?
The payments can be made in person, by mail, by automatic transfer, by payroll deduction, via online banking, or via Tel-A-Cap.
Can I have HELOCs on multiple properties?
No. Only one HELOC is available per member/community.
How is the minimum payment calculated?
1.50% of the outstanding balance (minimum $50.00).
Can the interest rate be locked in?
No. The rate is variable and cannot be locked. (Rate and margin are based on credit history.)
If the rate adjusts, it does affect the entire balance in use.
Ex: Current prime is 3.50% + Margin of 2.00%= 5.50% interest rate. If the Prime goes up or down, they will always be 2.00% higher than that amount.
Is there an annual fee?
The annual fee is waived the first year.
A $60.00 Annual Fee will be assessed to the equity line on each anniversary date.
What insurance is required?
Proof of homeowners insurance is required. Proof of flood insurance is required, if applicable. No escrow will be required.
Will there be a lien placed on my home?
Your home will be used as collateral to secure the Home Equity Line of Credit.
NMLS # 411413
*HELOC interest rates are variable, based on an index plus a margin and may vary after the account is open. The index is PRIME as published in the Wall Street Journal. The rate effective on the first day of the billing cycle will be based on the index as of the last day of the preceding month. The APR range is 5.75% to 11.50%. The rate is subject to adjust monthly. The margin will be based on your credit score, debt ratio, and loan to value – see lender for additional details. There is an annual fee in the amount of $60 which is waived the 1st year. The minimum loan amount is $10,000 with a required initial draw of $1,000. Twenty-four draws (6 per quarter) are allowed annually, with a 5 year draw period and a 10 year payback equaling a 15 year term. Monthly payments are 1.50% of the principal balance during the draw period and amortized to payoff in 10 years when the 5 year draw period is over. Property insurance with La Cap listed as lien holder is required, as is flood insurance if applicable. Loan to value allowed up to 80%. Higher loan to value will be determined on an exception basis. Closing cost will be $0.00 to $900. Closing cost does not include full appraisal fee if appraisal is required. La Cap will pay the closing costs; however, these costs will be charged back to the borrower(s) if the HELOC is closed within twenty-four (24) months of origination. Other restrictions may apply.
