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Equity Glossary of Terms |
| An amount that
is charged annually for having the line of credit
available. It is charged regardless of whether
or not you use the line.
Note: check your
terms to ensure that the lender does not charge
an annual membership or participation fee. If
they do, negotiate to have these terms removed
or find another lender. |
| The cost of credit
on a yearly basis expressed as a percentage. |
| Fees that are paid upon application.
An application fee may include charges for property
appraisal and a credit report. |
| A lump-sum payment that you
may be required to make under a plan when the
plan ends. |
| A limit on how much the variable-interest
rate can increase during the life of the plan. |
| Fees paid at closing,
including attorneys' fees, fees for preparing
and filing a mortgage, for taxes, title search,
and insurance.
Note: check the
terms for any closing costs. Most lenders do not
charge closing costs unless you close your account
early. Again, negotiate to have closing costs
removed. |
| The maximum amount that you
can borrow under the home equity plan. |
| The difference between the
fair market value (appraised value) of your home
and your outstanding mortgage balances. |
| The basis for rate changes
that the lender uses to decide how much the annual
percentage rate will change over time.
Note: most lenders
use the Wall Street Journal PRIME RATE as its
index. If they don't, ask to view their rate
trends for the past 2 years. Check for rate
change frequency and how high their rate has
climbed. |
| The periodic charge, expressed
as a percentage, for use of credit. |
| The number of percentage points
the lender adds to the index rate to determine
the annual percentage rate to be charged. |
| The minimum amount that you
must pay (usually monthly) on your account. In
some plans, the minimum payment may be "interest
only." In other plans, the minimum payment
may include principal and interest. |
| A point is equal to one percent
of the amount of your credit line. Points usually
are collected at closing, and are in addition
to monthly interest.
Note: most lenders
do not charge points. But some lenders do allow
points in exchange for lower interest rates.
Check with the lender. |
| An interest that a lender
takes in the borrower's property to assure repayment
of a debt. |
| A fee charged
each time you draw an amount on your credit line.
Note: Most lenders
do not charge an access fee. However, some lenders
may require you to borrow a minimum amount each
time you draw on the line (for example, $300)
and to keep a minimum amount outstanding. Check
your terms. |
