Home Equity FAQ
1.How much does it cost to apply for a GSB Home Equity Line of Credit (HELC)?
There is no application fee. There is a $50 annual fee (waived during the first year) then annually, beginning one year after the contract date of your loan.
2.How is the HELC interest rate determined?
Your HELC interest rate is a floating rate based on two factors: 1) the current Wall Street Journal prime rate and 2) the amount of the approved credit line.
3.What does LTV ratio mean?
LTV stands for "Loan-to-Value". It is used to determine the maximum amount available to borrow based on the equity in your home. To better explain, the following is an example representing a 75% LTV guideline: (The maximum home equity loan / line amount is currently $200,000.)
Step 1: Multiple appraised value of home by 75%
- $400,000 x .75 = $300,000
Step 2: Subtract all money currently owned on home
- $300,000 - $235,000 = $65,000
(Maximum dollar amount available for GSB Home Equity Loan = $65,000)
4.How do I know if I qualify for a Home Equity Loan?
Qualifying for a Home Equity loan is based on various factors. Approved line amounts will depend on your home's appraised value, your indebtedness, your income and credit history. Whether or not you qualify, we will let you know within 48 hours of application.
5.How long is the term of GSB's HELC?
GSB's HELC stays active for five years. At the end of the five years, you have several options. You can pay off any remaining balance and close the loan. You can apply online or in person to renew the loan (assumes qualifying under GSB's standard underwriting guidelines). You can also renew the loan and request an increased line of credit amount.
6.Are there any restrictions on how I may use my GSB Home Equity Line of Credit?
Absolutely not! Improve your residence, buy a car or boat, take a trip, or get a new wardrobe. It's 100% up to you, and unlike many banks, there is no minimum amount restriction per check, so if you want to buy concert tickets with your HELC, be our guest.
7.How do I pay back what is owed on my HELC?
Similar to a credit card bill, each month you will receive a statement of your account that, among other things, will display your current balance, minimum payment due (interest only), and the prevailing interest rate. Each month you are required to pay back, at a minimum, the interest due which is solely based on the interest rate, your balance, and the number of days in that particular billing cycle.
Here is an example:
- Balance at beginning of billing cycle $10,000 (assumes no payment made or checks written)
- Interest rate: 4.25% APR
- Days in billing cycle: 30
- Days in year: 365
Minimum interest payment due: $34.93 ($10,000 x .0425 = $425 / 365 = $1,1644 x 30 = $34.93
If you have taken advantage of our automatic debit payment feature, the interest due will automatically be deducted from your GSB checking account, so there are no bills for you to manually pay.
8.What if I want to pay more than the interest due?
You can pay any amount of your balance you want (commonly called "principal"), whenever you want. Any amount above and beyond the interest due will be applied toward your Home Equity loan and will reduce the balance owed, and consequently, will reduce the amount of interest owed. Even better, as a GSB checking account customer, you can easily made additional payments to you HELC through our 24-hour phone system, PHONEBanker, or by using our free online banking system, HOMEBanker.
9.Is the interest I pay on my GSB HELC tax-deductible?
Starting in 2018, any interest paid on Home Equity Loans is generally no longer tax-deductible. There are a few exceptions, but you should check with your tax advisor regarding deductibility.
10.Is there such a thing as a fixed-rate Home Equity loan?
Yes. GSB offers a Fixed Rate Home Equity Loan that allows you to borrow a set amount of money up front with a fixed rate and fully amortized payments set for 3, 5, 10 or 15 years. In a raising rate environment, a fixed rate home equity loan may be a good choice for borrowers who don't want to worry about a rising variable rate possibility and who like to have a set monthly payment with fully amortized principal and interest payments. Please call (847) 729-1900 if you would like further details about fixed rate home equity options.
11.How do I get started?
It's about time you asked! You can Apply Online Now, or if you wish, stop by any of our convenient locations and apply in person.
* The Home Equity Line of Credit is secured by a primary residence. Maximum APR is 18%. Minimum line amount is $10,000. Rates and terms are subject to change at any time. Property insurance is required. Early termination fee may apply.