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Home Equity Financing

Is this your first home equity loan? Before you apply, learn the essentials of using your home to finance major purchases and expenses.

What is home equity?
Home Equity is the difference between the appraised or fair market value of your home and the current mortgage balance(s) and any outstanding liens on your home. Your home’s equity can grow as you pay down the mortgage balance(s) and/or as your home increases in value.

What's the difference between a home equity line of credit and a home equity loan? Learn more. Why is home equity a smart choice over other types of financing? Home equity products typically have lower interest rates than many other types of credit and the interest paid is potentially tax-deductible*. The three most popular uses of home equity accounts are to finance home improvements, consolidate bills, and make big purchases. Learn more. Home equity financing can also be a great way to buy your dream house! Why deplete your savings when you can use home equity financing for your down payment? With options like zero down/100% financing** and monthly payments as low as interest only during the draw period, home equity financing through the NEA Home Financing Program can be a smart way to: Qualify for more home Optimize cash flow each month Avoid Private Mortgage Insurance (PMI) Keep your savings intact

Calculators What can you qualify for today?   Start your application online!   Frequently Asked Questions

What are the benefits to NEA members? Potential tax-deductible interest* .25% discount for automatic payment from your checking account Dedicated consumer help line for NEA members Fast response when you apply online Free online access to your account Also available to family members (parents, adult children)

Need advice, have a question, or want to apply?
Call the NEA Home Financing Program today for a no-obligation consultation:

1-800-NEA-4-YOU
(1-800-632-4968)

Mon-Fri 8:00 a.m. – midnight (ET)
Sat 9:00 a.m. – 5:30 p.m. (ET)

*Please consult your tax advisor regarding tax-deductibility
**Subject to Credit Qualification
Home equity financing is offered by Wells Fargo Consumer Credit Group, a division of Wells Fargo Bank N.A. Wells Fargo Home Mortgage is a division of Wells Fargo Bank N.A.
©2005 Wells Fargo Bank, N.A. Member FDIC. All rights reserved. 7/05

EquityLine® Account (HELOC)
The Annual Percentage Rate (APR) on a Wells Fargo EquityLine® Account varies daily and is based on an Index plus a margin. The Index is the highest Prime Rate published daily in the Money Rate Tables of The Wall Street Journal (Western Edition). The Index as of June 29, 2005 is 6.00%. The margins currently range from 0.035% to 5.375% resulting in corresponding variable APRs from 6.375% to 11.375%. The APR will never be less than 4.24% or more than 18.00%. A discount of .25% is applied to the margin for automatic payment from a qualified checking account and will increase if the automatic payment is not elected or is cancelled at any time after the account is opened. Fees, charges, and costs to open the account are $0.00 to $9,000 and vary depending on the state in which the property is located, the amount of credit extended and the type of transaction. All or a portion of these fees, charges and costs may be paid to Wells Fargo, it affiliates or third parties as necessary to obtain secured credit. $75.00 Annual Fee is waived the 1^st year the account is opened. $500.00 prepayment fee will be collected if the account is closed within 3 years after the account is opened. Property insurance and flood insurance, if applicable are required. Minimum line of credit amount is $10,000; the maximum line of credit amount is $500,000. Line of credit amounts depend on Wells Fargo underwriting standards, including an evaluation of borrower’s credit rating, property type and combined loan to value.

Home Equity Loan (HELOAN)
A ­­Wells Fargo Home Equity Loan of $50,000.00, payable in 180 monthly installments with an Annual Percentage Rate (APR) of 7.25% would require monthly payments of $456.59, and a final payment of $456.86. A discount of 0.25% for automatic payment from a qualified checking account is included in the above APR and will increase if the automatic payment is not elected or is cancelled at any time after the account is opened.  Fees, charges, and costs to open the account are $0.00 to $9,000 and vary depending on the state in which the property is located, the amount of the credit extended and the type of transaction. All or a portion of these fees, charges and costs may be paid to Wells Fargo, it affiliates or third parties as necessary to obtain secured credit. Property insurance and flood insurance, if applicable are required.

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The three most popular uses of home equity accounts:

1. Home improvements
Many homeowners access their home equity to pay for remodels and other home improvements — everything from a new kitchen or bathroom to a series of repairs and upgrades.

2. Bill Consolidation
You can also use your home equity to combine all of your high-interest bills into a single, more manageable monthly payment. You can increase your cash flow by lowering your monthly payments and — since it’s easier to keep track of just one bill — more effectively manage your finances.

If you’re paying high interest rates on outstanding balances, consolidating your bills with a lower-rate home equity line of credit or loan could significantly reduce the amount of interest you pay over time.

3. Big purchases or expenses
Lower rates and potentially tax-deductible interest¹ can make home equity financing a less expensive option than a traditional loan. So a home equity line of credit or loan is also a good way to finance large purchases or expenses such as:

• A new car
• College tuition or other education expenses
• Medical expenses
• A life event (wedding, baby, retirement)
• Taxes
• Investment opportunities

¹ Consult your tax advisor

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Home Equity Frequently Asked Questions

Basics
1. Must I own a home to get a home equity line of credit or loan?
2. Must I occupy the residence I'm using as collateral?
3. What is the difference between a home equity loan and a home equity line of credit?
4. How much can I borrow?
5. What are the terms or repayment periods available?
6. What are the minimum payment terms?

Rates
7. Is the interest rate fixed or variable?
8. How is the interest rate calculated?
9. What is the maximum APR on my home equity line of credit?
10. Is the interest tax deductible?

Application
11. How quickly can I get approved?
12. How quickly can I close my loan?
13. Are there any fees to apply?
14. Can I lower my interest rate by paying more up front when I open my loan or line of credit?
15. Is there an annual fee?
16. Is there a prepayment fee?

Basics

1. Must I own a home to get a home equity line of credit or loan?
Yes.

2. Must I occupy the residence I'm using as collateral?
You do not have to occupy the residence you are using as collateral unless you are requesting a home equity loan or line of credit to access more than 80% of your available equity.

3. What is the difference between a home equity loan and a home equity line of credit?
A home equity loan has a fixed interest rate and term, therefore your payments stay the same each month. A home equity line of credit features a variable interest rate with a draw period of 10 years and a repayment period of 15 or 30 years. During the draw period, your monthly payments may be as low as the interest on your outstanding balance.

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4. How much can I borrow?
Your credit limit (also known as available equity) is determined by taking a percentage (for example 80%, 90% or 100%) of your home's appraised or fair market value, and subtracting the balances of any outstanding mortgages on the property. If you qualify, the minimum home equity loan or line of credit amount is $10,000 and in most cases the maximum is $500,000.

5. What are the terms or repayment periods available?
Home equity loans offer terms between five and 30 years. Home equity lines of credit can be drawn on for 10 years. After 10 years, you can apply to renew your line of credit. If you do not renew, you can pay your account balance in full (balloon payment) or you can choose to make payments of interest and principal for up to an additional 10 years, depending upon the repayment terms and conditions of your account agreement.

6. What are the minimum payment terms?
For home equity loans, the amount you borrow determines your payment amount which stays fixed for the life of the loan. For home equity lines of credit, your minimum payment during the 10-year draw period is equal to one month's accrued interest, plus any assessed fees (a late fee for example). You can elect to pay only the interest or 1.5% of your outstanding equity-line balance, whichever is greater.

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Rates

7. Is the interest rate fixed or variable?
Home equity loans offer a fixed interest rate with fixed monthly payments, while home equity lines of credit feature a variable rate so monthly payments can increase or decrease as rates and your principal balance change. Interest rates are based on the amount you borrow and the term of the loan or line of credit.

8. How is the interest rate calculated?
The general interest rate level in the economy is influenced by the Federal Reserve Board, degrees of inflation, demand for borrowing money, the stock market, and a number of other factors.

A home equity line of credit has a variable interest rate, so monthly payments increase or decrease as rates and your principal balance change.

A home equity loan has a fixed interest rate, giving you the peace of mind that your payment amounts won’t change with rate fluctuations.

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9. What is the maximum APR on my home equity line of credit?
The Annual Percentage Rate (APR) for a Wells Fargo home equity line of credit will not exceed 18%.

10. Is the interest tax deductible?
In most cases the interest on a home equity loan or line of credit of up to $100,000, and a maximum loan-to-value ratio of 100%, is tax deductible. Consult your tax advisor about your specific situation. IRS Publication #936 "Home Mortgage Interest Deduction" has more information.

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Application

11. How quickly can I get approved?
If you apply online, you may be approved instantly, subject to verification of your application information.

12. How quickly can I close my loan?
You can close your loan within 10 business days if you qualify. In order to qualify you must meet certain credit criteria and be eligible for an automated valuation appraisal. The average time for closing a loan varies, but generally loans close within 20 to 25 business days.

13. Are there any fees to apply?
There are no fees to apply. However there may be fees due at loan closing, depending on the type of home equity account you choose and the state in which the collateral property is located.

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14. Can I lower my interest rate by paying more up front when I open my loan or line of credit?
Yes, you can choose to buy down, or lower, your interest rate.

For home equity loans and lines of credit, you can lower the interest rate by 0.25% by paying a one time fee of 1% of your opening balance amount. The maximum buy down amount is 3% of your opening balance for a 0.75% loan rate discount for home equity loans and lines of credit.

For both loans and lines of credit you can also receive a 0.25% APR discount for signing up for automatic payments from your checking account.

15. Is there an annual fee?
A home equity line of credit has a $75 annual fee which is waived the first year. After the first year, we will continue to waive the annual fee if you maintain an average daily balance of $20,000 or more.

16. Is there a prepayment fee?
There is a $500 prepayment fee if you close your account within three years of the origination date for reasons other than default, casualty loss, or refinancing with Wells Fargo. We will not charge a prepayment fee if your account remains open more than three years. This prepayment fee does not apply to lines of credit secured by homestead collateral located in Texas.

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