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What's the difference in a home equity line of credit and a home equity loan?

home equity line is an open line of credit. You are approved for a specific credit limit that can be used repeatedly over a period of time. A home equity loan is made for a fixed amount at a fixed term and the monthly payment amount is fixed for the specific term of the loan, and no advances can be made after the funds are disbursed.

Both are loans using your home as collateral, without paying off your first mortgage. Our equity comparison chart can help compare the differences between the loans.

How do I decide which loan is best for me?

That decision is based on your needs, personal preferences and feelings about fixed versus variable loan rates. Generally speaking, a fixed-rate home equity loan is good when you want to consolidate debts or manage large, one-time expenses, and a variable-rate home equity line of credit is good for expenses that may reoccur such as college tuition or home improvements. More details on the two types of equity loans are available on our equity comparison chart.

What are the requirements for property used as collateral for a home equity loan or line of credit?

The property being used as collateral must be located in Virginia. Either your second or vacation home (not used for rental) located more than 50 miles from your primary residence can be used as collateral. Eligible properties include one to two family homes and condominiums. Any liens other than your first mortgage must be paid off in full before or at closing, and all owners holding a title interest in the property must sign all appropriate closing documents. Property insurance is required on all properties being used as collateral. If applicable, flood insurance may be required.

Is there a minimum loan amount?

The minimum loan amount is $20,000. You can borrow up to 90% of the appraised value of your home, less the balance of your first mortgage, from $20,000 to $100,000; up to 85% for loan amounts over $100,000. We have a maximum LTV of 80% for loan amounts over $175,000 up to our maximum amount of $200,000.

What is "available equity?"

Subtract the total amount of mortgages you owe on your home from the appraised value of your home; the difference is the available equity. Other factors such as income, debts, ability to repay and other credit criteria will also help to determine your approved loan amount.

What is the turnaround time for the home equity loan process?

From application to closing, the process typically takes 4-6 weeks and includes the ordering of any documents that may be required (payoff statements, appraisal, title examination, etc.)

How will my home equity loan closing be handled?

For your convenience we will arrange for a notary to meet with you at a location of your choice.  All owners of the property will need to sign.

How soon will I get my home equity loan proceeds once I sign the closing documents?

After closing, as required by law, you have 3 business days to cancel your loan transaction with the credit union. Your loan proceeds can be disbursed on the fourth business day.

What are the closing costs for a home equity loan?

Currently, the credit union pays all the closing costs and closing fees associated with your home equity loan or line of credit, as long as it is kept open for 36 months after the opening date.

What happens if I pay off or close my home equity loan within 36 months?

If you pay off your home equity loan or close your home equity line of credit within 36 months of opening it, then you will pay a reimbursement fee equal to the amount of closing costs originally paid by VACU. We also require that you have property (homeowners) insurance. Paying only the minimum monthly payment on an equity line can result in a balloon payment due at maturity.

How can I make my home equity payments?

Payments on your home equity loan or line of credit can be made through QuikLine, Online Banking, Mobile Banking, postal mail, at any VACU branch, or using any form of automatic payment such as ACH or automatic transfer. All payments are due by the 28th of the month.

How can I access funds from my home equity line of credit?

You can write a home equity line of credit check, transfer funds to your checking or another VACU account through QuikLine Phone Banking, Online Banking, Mobile Banking, at any VACU branch or by calling Member Services.

Can I extend the draw period on my home equity line of credit?

No, but you can apply for a new home equity line of credit. You will need to have sufficient equity in the property to be considered for the new requested limit.

If I get a fixed rate home equity loan, when is the interest rate determined?

You will get the rate in effect the date you applied for your loan.

Are there any rate discounts available on a home equity line of credit?

We are currently offering an introductory rate for home equity lines of credit. Visit our equity line of credit page for information.

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