Home Equity Line of Credit

A Home Equity Line of Credit (often referred to by its acronym “HELOC”) is a flexible borrowing tool. With a Home Equity Line of Credit you are approved for a fixed loan amount, but you do not receive the entire amount. Instead you receive checks or you can transfer the money to your NBM checking account and from there write checks or withdraw the money as needed. You pay interest only on the amount of money you have taken out.

How does it work?

A mortgage is held against your property to secure the loan. If you have a first mortgage, a HELOC can be written as a second mortgage. You can borrow 70% to 80% of the value of the property. Generally, the value is determined by a property valuation completed by the bank. An appraisal may be required if sufficient data isn’t available.

You apply for a HELOC just like any other loan. The bank considers all underwriting factors to determine eligibility.

Key features of our HELOC program

A HELOC is a revolving line of credit with a variable interest rate.

  • The minimum credit limit is $20,000 and the maximum is $250,000 depending on the equity in your home.
  • You borrow as needed by drawing the funds from the line of credit. You have the flexibility to pay back the principal balance as you see fit and then you can borrow again.
  • The expected monthly payment is interest only on the funds drawn. You have access to draw on the line of credit for 10 years or until the home is sold. If you have a balance after 10 years, the balance of the line of credit will go into repayment for 15 years.
  • Unlike many HELOCs available in the market place, we do not charge a draw fee, annual fee or early closure fee.

Why would you use the equity in your home to borrow?

In many cases, your home is one of your largest assets. Having a HELOC in place allows you to borrow money against your asset for various reasons. The most common reason is to improve your home. You may need a new roof, siding or furnace. You may want to remodel your kitchen or bath or perhaps finance energy improvements. Funding college education is another top reason to secure a HELOC. You could buy a car, recreational vehicle, invest in a business or another property. Some homeowners consolidate other debts such as credit cards. Others establish a HELOC for emergency purposes or to have a “cash reserve”.

If you use the available funds for purposes other than improving your home, make sure that it is a wise move for you financially. It is expensive to maintain a home. Consider reserving equity for improvements first before you borrow for other reasons.

Consult a National Bank of Middlebury Community Lender today. We are ready for your questions and to assist every step of the way.

*Home Equity Flex revolving home equity line of credit loan program. Applications are subject to credit approval and this offer is subject to change. Available for primary and second year-round 1-4 family homes. $20,000 minimum, up to a maximum of $250,000, loan-to-value ratio will not exceed 80% for primary residences and 70% for year round second homes. Customary closing fees are $325. An appraisal may be required at the owner’s expense. 10 year draw period followed by a 15 year repayment period. Interest Rates are subject to change. The maximum APR is 18% under this variable interest rate loan. Current APR is between 3.25% and 4% depending on the amount borrowed. The APR will equal the Wall Street Journal Prime Rate plus a margin of 0% to .75% depending on amount borrowed. Refinance of existing National Bank of Middlebury home equity lines of credit must increase credit limit by at least $20,000. Fixed rate conversion option available. Property insurance is required. No draw fee, no annual fee.