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What is a Home Equity Line of Credit?
A Home Equity Line of Credit (HELOC) is a revolving credit line that allows homeowners to borrow against the equity in their property. The equity represents the difference between the home’s market value and the outstanding mortgage balance. HELOCs come with variable interest rates [2] and typically have a draw period during which borrowers can access funds. The many benefits of a Home Equity Line of credit include flexible access to funds, lower interest rates compared to other forms of credit, the potential to increase your home’s value, and tax deductibility. (Situations vary, please consult with your tax adviser to determine if your HELOC qualifies for tax deductions.)[4]
Benefits of a HELOC with Bethpage
Closing Cost on Loans[3]
Application, Origination, and Appraisal Fees[3]
Low interest-only payments for the first 10 years (i.e., the draw period)[4]
Once you’re approved, getting started with a HELOC from Bethpage is quick.
On average, access funds within 35 days![5]
So you can start accomplishing more, faster.
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What can you use a HELOC for?
Home improvements
You could use a Home Equity Line of Credit to upgrade to the kitchen or backyard of your dreams.
Student loans and tuition
A HELOC could fund tuition expenses or pay off high-interest rate student loans.
Debt consolidation
A HELOC could help you consolidate and pay off loans or expenses with a potentially lower interest rate.
Life event fund
A home equity line of credit can be a safety net for any unforeseen expenses.
Fixed-rate HELOC options from Bethpage[6]
Looking for predictable monthly payments?
Bethpage offers the option to convert some or all of your variable-rate HELOC to a Fixed-Rate Loan Option (FRLO) for no additional cost.
Benefits of a Fixed-Rate Loan Option
- Protection from rising rates
- As many as three (3) Fixed-Rate Loan Option balances at one time
- The ability to draw a minimum of $10,000 for each Fixed-Rate Loan
- 5-year, 10-year, and 20-year repayment terms[2]
How Does a Fixed-Rate Loan Option Work?
Example: $100,000 Total Home Equity Line of Credit
Helpful home loan resources suggested for you.
Find out more about home mortgages, home finance, loans and more.
Our HELOC team is ready to serve you!The loan representative and closing agent were personable and knowledgeable. Branch staff are always helpful and expeditious, which eliminated wait times.
Graham M.
- January 2020
Home Equity Line of Credit FAQs
The amount of credit you qualify for depends on the market value of your home, current mortgage balance, credit history and other criteria.
For example, let’s say your home is worth $500,000. How much you can borrow starts with 70% of that value, or $350,000. Next, subtract your mortgage balance from $350,000. So, if you currently owe $250,000 on your mortgage, then $350,000 less $250,000 means you have $100,000 in home equity that you can borrow against.
To estimate how much you may be able to borrow, Contact Us and a home lending specialist will follow up with you to discuss your options.
Rates are dependent upon your credit history and your home’s Loan-To-Value ratio (LTV), which is the relationship between your current mortgage balance and the value of your home.
To receive the best rate, your Combined Loan-to-Value (CLTV) must be a maximum of 75%, you must take $25,000 at closing and maintain that balance for 12 months, you must automatically deduct your payments from your Bethpage checking or savings account, and you must not have had a previous introductory rate for a Bethpage HELOC within the past five years.
Contact Us to learn more about how to get the best rate.
During the 10-year draw period, which is the amount of time when you’re allowed to borrow against your line of credit, you’ll be making payments every month based only on the interest due on the variable amount you’ve borrowed. If you convert any available funds to the fixed rate loan option, your repayment terms for the fixed rate portion will include principal and interest payments for the term you select.
Once the draw period ends, you’ll be required to repay any outstanding HELOC variable-rate balance loan with monthly principal and interest payments over a 20-year term.
Whether or not an appraisal will be required is dependent upon a variety of factors, such as: property type, loan amount and your home’s Loan-To-Value ratio (LTV). LTV is determined by your current mortgage balance in relation to how much your property is worth. The most common factors that require an appraisal are: a loan amount over 400K or a LTV that exceeds 75%.
Your Bethpage Lending Representative will let you know if an appraisal is required during the lending process.
On average it takes 6 – 10 weeks from the date of your application to close on your HELOC. Some loans may close faster. You can minimize the length of time as much as possible, by providing all required supporting documents up front — such as proof of income, homeowners insurance, etc.
The documentation you will need to obtain a Home Equity Line of Credit includes:
- Most recent pay stubs covering the last 30-day period
- Past two years of W-2 Forms from all employers (current & previous)
- 2 most recent bank statements (all pages). Include all accounts used for transaction
- Past 2 years of Federal Tax returns (1040 Form) with all pages and schedules (if applicable, self-employed/rental income/retirement income)
As you go through the process, additional documentation may be needed.
Situations vary, please consult with your tax adviser to determine if your HELOC qualifies for tax deductions.
Rates and terms are subject to change without notice. All offers of credit are subject to credit approval requirements and applicants may be offered credit at higher rates and other terms. Loan-to-Value (LTV) and/or Combined LTV (CLTV) restrictions apply. Hazard insurance is required on all loans secured by real property (flood insurance may also be required where applicable). Rates shown are based on a borrower’s primary residence, a maximum CLTV of 65%, a minimum initial draw of $25,000 taken at HELOC account opening, and automatic transfers from a Bethpage personal savings or checking account. Consult a tax professional regarding the potential deductibility of interest. Bethpage does not currently offer HELOCs in Texas. Membership at Bethpage is required by opening a minimum $5 share savings account at or prior to HELOC account opening.
[1] APR = Annual Percentage Rate. The introductory APR is fixed for one year (twelve months). After one year, the APR is variable based on the U.S. Prime Rate as published in the Wall Street Journal, plus a margin. To obtain an introductory rate, borrower must meet credit and loan program requirements, including (but not limited to): 1) maximum Combined Loan-to-Value (CLTV) of 75%, 2) minimum VantageScore 4.0 credit score of 720 3) borrower must take an initial draw of $25,000 and maintain this balance for 12 months, 4) borrower must have automatic transfers from a Bethpage personal savings or checking account for the monthly HELOC payments, and 5) borrower must not have had a previous introductory rate for a Bethpage HELOC within the past five years. The introductory rate applies to the variable line in use only and is not applicable to any Fixed-Rate Loan Option, (see below)[6]. Loan amounts over $500,000 are not available for the introductory rate. For Closing costs, see below[3].
[2] The standard APR is variable based on the U.S. Prime Rate as published in the Wall Street Journal, plus a margin (if applicable) and is subject to increase after consummation. The current standard APR is as low as 7.50% as of –/–/–. Not all applicants will qualify for the lowest rate and may be offered credit at higher rates and other terms based on creditworthiness. The minimum floor APR is 3.25%. HELOC rates may not exceed the maximum legal limit for Federal credit unions (currently 18%). The Prime Rate as of –/–/– = 7.50%. Rates shown are based on a borrower’s primary residence, a maximum CLTV of 65%, a minimum initial draw of $25,000 taken at HELOC account opening, and automatic transfers from a Bethpage personal savings or checking account. For Closing costs, see below[3].
[3] Closing costs for the first $500,000 will be paid by Bethpage but must be repaid by the borrower(s) if the HELOC is closed within first 36 months of account opening. These fees generally range between $500.00 and $15,000.00 depending on the line amount, property value, location, and/or property type. Line amounts over $500,000 may be available on a case-by-case basis to qualified applicants, are not eligible for the discounted introductory rate at any time, and the borrower(s) will be responsible for mortgage-related taxes and title insurance costs on the line amount over $500,000 (up to the approved credit limit). The total third party fees generally range between $500.00 and $60,000.00 depending on the line amount, property value, location, and/or property type. Property insurance (including flood insurance, if applicable) is required.
[4] Interest-only payments apply to the variable rate line in use only and is not applicable to any Fixed-Rate Loan Option.
[5] Our average time to fund is based on data from applications received between January 2023 through December 2023. Closing and funding times may vary for each application, its complexity, and other factors. Although our average time to close may be quicker, generally a HELOC secured by a borrower’s principal dwelling is subject to a borrower’s 3-day right of rescission. Therefore, most HELOCs, regardless of lender, typically fund on the fourth business day following closing.
[6] A Fixed-Rate Loan Option (FRLO) allows you to convert an outstanding variable rate HELOC balance(s) to a fixed rate loan(s), which results in fixed monthly principal and interest payments at a fixed interest rate. A FRLO is optional and is available at the time of disbursement (account opening), or during the 10-year Draw Period. Borrowers may only have a maximum of three (3) FRLOs open at any one time. The minimum amount for each FRLO is $10,000. The minimum loan term is 5-years, and the maximum term cannot exceed the account maturity date. If you choose to convert any portion of your balance to a FRLO, the APR will be the U.S. Prime Rate as published in the Wall Street Journal that is in effect at the date of conversion, plus a margin. The margin applied will be based on your credit history, CLTV ratio, and lien position at the time of application and the term selected for the FRLO. Rates for a FRLO are typically higher than the variable rates on the HELOC account.
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