In very large print: 5.24%, 5.24%, 5.24%, APR Home Equity Line of Credit. Prime minus 1.01% for the life of the loan. Interest only payments. Fast credit decision. No closing costs. Apply in the branch, on the phone or online. A great rate and fast decisions make our home equity line stand apart. It’s another way your bank in Brattleboro goes above and beyond. Apply today for the home equity loan that gives you prime minus 1.01% for life!
In very small print: The Annual Percentage Rate (APR) is based on the Wall Street Journal Prime as of 6/30/05 that was 6.25%. Loan to value ratio not to exceed 80%. Eligible on 1 to 4 family primary residences and second homes, excluding mobile homes, for credit lines up to $500,000. Property insurance is required. Interest rates are subject to change without notice but will never exceed 18%. Annual fee of $50 applies. Penalty for early termination. Automatic payment from a checking or savings account required. Initial minimum draw of $25,000 and a minimum line of $200,000 required to qualify for this rate. Interest only payments during the draw period.
Translation of the fine print:
The bank will lend money at 1.01% below the prime lending rate with the following conditions. If, according to the Wall Street Journal newspaper, the prime lending rate goes up, the loan interest rate will also go up but will not go above 18%. A $200,000 loan for 30 years at 5.24% will cost $1,103 a month. If stagflation occurs as it did in 1978 and interest rates suddenly rise, the monthly minimum payment will triple to $3,014. In the worst case scenario, the total interest paid on a $200,000 loan will not exceed $885,101.
The interest only payments are applicable in the allotted time frame determined by the bank. When interest only payments are made, the borrower relinquishes all equity in their property and becomes the equivalent of a renter with the bank holding eviction rights.
If the home equity loan is paid off before the full term of the loan, which is required if the property is sold, the bank has the legal right to collect from the borrower the remaining interest that would have been paid if the loan had not been prepaid.
The bank will withdraw interest and mortgage payments directly from the borrowers checking and savings account. If the money is not in the accounts at the time payment is due, then the borrower is placed into default and the bank will begin foreclose proceedings on the borrowers property.
The bank will also withdraw Brattleboro water, sewer, and property taxes one month before the payments are due. The bank will remit the taxes to the Town to make certain that the bank maintains its primary lien status in the event that the borrower defaults on the loan and files for bankruptcy in Rutland Federal Court.
The bank will require the borrower to purchase property insurance, but the bank will be named as the primary beneficiary. In the event of any type of loss, regardless of the amount, the bank will receive any and all insurance reimbursements and remit those monies to the borrower at the bank’s discretion.
If, for some reason, the home equity loan exceeds 80% of the value of the property (i.e. the loan was spent on purchases other than home improvements) then the principle and interest payments will be increased to pay off the loan in the shortest time frame possible. Within the banking community, this process is called “Payment Shock”.
The annual fifty dollar home equity bank fee withdrawn from the borrowers account is to cover the cost of the in-house electronic transfers from the borrowers account to the bank’s account.
When applying for a home equity loan, the bank does not discriminate by race, creed, color, ethnic background, marital status, or sexual orientation. However, the bank will not approve this particular home equity loan if the borrower resides in a mobile home.
Fact: On March 1, 2005, this particular regional bank in Brattleboro was purchased by a foreign corporation. The President and CEO of the purchased bank was given a SEVENTEEN MILLION DOLLAR severance package as a thank-you for making the sale possible.
Conclusion: When applying for a home equity loan, please use caution. Take the time to think through the entire process and calculate a worst case scenario.
Sanctioned by the Vermont Department of Banking and Insurance, home equity loans in Brattleboro gives banks a license to steal.