Residents taking advantage of low interest rates for home equity loans
Lending officers are reporting that area residents are taking advantage of historic low interest rates with home equity loans during the closing months of 2014.
David Brescoach, lending manager at Frick Tri-County Federal Credit Union in Uniontown, said a lot of customers are inquiring about the home equity loans, which have similar terms to mortgages.
鈥淲e鈥檙e very busy,鈥� said Brescoach.
Trisha Hottle, consumer loan officer at Somerset Trust蘑菇视频 main office in Somerset, also reported an influx of customers applying for home equity loans in November and December.
Home equity loans come in the forms of a revolving line of credit that lets you withdraw funds as needed or a lump sum.
The loan is repaid with equal monthly payments over a fixed term, just like an original mortgage.
鈥淲ith mortgage rates as low as they are now we鈥檙e seeing a lot (of customers) that like the open end option,鈥� said Hottle.
According to the Federal Trade Commission, the amount borrowed usually is limited to 85 percent of the equity in your home.
The actual amount of the loan also depends on your income, credit history, and your home蘑菇视频 market value.
A survey by the National Retail Federation reported the average American planned to spend around $800 this year on items ranging from gifts, decorations, food and greeting cards.
Brescoach said the credit union has approved home equity loans ranging from $7,000 to $100,000 for a variety of uses such as for new vehicles, paying off student loans and small business purchases.
A home equity loan can also be used to refinance your current mortgage from another lender to consolidate higher-interest debt.
鈥淭here蘑菇视频 a lot of people out there that have equity in their homes, and it蘑菇视频 a good avenue for them to borrow money easily and cheaply,鈥� said Brescoach.
Brescoach added the rate and term for principal and interest is set in accordance with the federal government for each individual lending institution.
According to Brescoach, the credit union currently offers a fixed rate starting at 2.99 percent for a home equity loan that can be taken out in increments of five years up to 20 years.
Hottle said Somerset offers home equity loans consisting of a fixed rate with a $5,000 minimum that starts at 4.99 percent and a variable rate starting at 2.79 percent for $10,000 for the first six months.
After that, Hottle said the variable rate is adjusted in accordance with the market rate that can go up to 3.25 percent.
While most home equity loans come with loan origination fees, Hottle said it is waived by Somerset if the money is drafted from a banking account set up with Somerset.
Hottle added that other discounts are applicable for automatic payment plans.