Important Terms of
our Home Equity Access VisaŽ Account (Line of Credit)


Please read and accept the following terms in order to begin the application process. This disclosure contains important information about our Home Equity Line of Credit. You should read it carefully and keep a copy for your records.

AVAILABILITY OF TERMS
All of the terms below are subject to change prior to the opening of your Home Equity account. If these terms change (other than the annual percentage rate) and you decide, as a result, not to enter into an agreement with us, you are entitled to a refund of any fees that you have paid to us or to anyone else in connection with your application.

SECURITY INTEREST
We will take a security interest in your home. You could lose your home if you do not meet the obligations in your agreement with us.

POSSIBLE ACTIONS
We can terminate your line, require you to pay us the entire outstanding balance in one payment if:
We can refuse to make additional extensions of credit or reduce your credit limit if: MINIMUM PAYMENT REQUIREMENTS
DRAW PERIOD - You can obtain advances of credit during the draw period. The draw period is ten (10) years after the opening date. The draw period for you Home Equity Access Visa Credit Card and card expiration will not exceed ten (10) years. The minimum payment during the draw period is (a) calculated based upon 1.5% of your new total balance each month or $50.00, whichever is greater, or (b) your total new balance if less than $50.00 plus (c) any portion of the minimum payment(s) shown on prior statements which remains unpaid. In addition, any time your total new balance exceeds your credit limit, you must immediately pay the excess upon our demand. After the draw period ends the repayment period will begin and you will no longer be able to obtain Credit Advances. You must make regular monthly payments during both the draw and repayment periods.
REPAYMENT PERIOD - The repayment period begins after the expiration of the ten (10) year draw period. The minimum payment due during the repayment period is calculated for a fifteen (15) year amortization schedule. Since negative amortization is not allowed during the repayment period, the minimum monthly payment due during the repayment period will be recalculated monthly to represent a fifteen (15) year amortization schedule based upon the current interest rate in effect on the first day of each month. The minimum monthly payment will be (a) the greater of this recalculation or $50.00, or (b) your total new balance if less than $50.00 plus (c) any portion of the minimum payment(s) shown on prior statement(s) which remains unpaid. Your monthly statement will indicate any change in your required monthly payment based upon this fifteen (15) year amortization. During both the draw and repayment periods, regular monthly payments will be due. You agree to pay not less than the minimum payment on or before the due date.

MINIMUM PAYMENT EXAMPLE
If you made only the minimum payments and took no other credit advances, it would take 15 years to pay off a credit advance of $10,000 at an annual percentage rate of 5.25%. You would make 120 monthly payments varying between $150.00 and $50.00 during the draw period. You would make 87 payments of $50.00 during the repayment period.

FEES AND CHARGES
Photocopy of credit line account - $2.00 per page
Overlimit charge - $15.00 if you exceed your credit limit by 2% of your credit line
Return check charge - $20.00
Reissue lost or stolen card - $5.00 for the first occurance; $20.00 for the second.
Unreturned card fee - $25.00 if card not surrendered at our request
Sales receipt fee - $10.00 for copy of a sales receipt

THIRD PARTY FEES
You may pay certain fees to third parties. These fees generally total between $100.00 and $600.00. If you ask, we will give you an itemization of the fees you may have to pay to third parties. If we pay third party fees (closing costs) on your behalf and, if whatever reason, your credit line account is closed within 18 months of the opening date, you will reimburse us for all amounts we paid for you.

LATE FEE
If your payment is 15 or more days late, you will be charged $15.00 or an amount not to exceed 5% of each installment or minimum payment due, whichever is greater. If your property securing your credit line account is located in New York, and your payment is 15 or more days late, you will be charged $15.00 or an amount not to exceed 2% of each installment or minimum payment due, whichever is greater.

TRANSACTION REQUIREMENTS
You must carry insurance on the property that secures this loan. The minimum amount of the first credit advance is $5,000.00. There is no minimum subsequent advance amount.

TAX DEDUCTIBILITY - You should consult a tax advisor regarding the deductibility of interest and charges for the line.

VARIABLE RATE FEATURE
This plan has a variable rate feature and the annual percentage rate (corresponding to the periodic rate), and minimum payment can change as a result. The annual percentage rate includes only interest and no other costs. The annual percentage rate is based on the value of an index.

RATE DISCOUNT
The initial ANNUAL PERCENTAGE RATE is not based on the index and margin used for later rate adjustments. The initial ANNUAL PERCENTAGE RATE will be in effect for three (3) months. Thereafter, the ANNUAL PERCENTAGE RATE will be based on the Index plus a margin.

DESCRIPTION OF INDEX
The index is the Prime Rate as published in the Wall Street Journal. When a range of rates is published we will use the highest.

SOURCE OF INDEX
The index is published in the Wall Street Journal. If the index is no longer available, we will choose a new index which is based on comparable information. To determine the annual percentage rate that will apply to your line, we add a margin to the value of the index. Ask us for the current index value, margin and annual percentage rate. After you open a credit line, rate information will be provided on periodic statement that we send you.

RATE CHANGES
The annual percentage rate can change on the first day of the billing cycle in the month following a change in the index. We will use the index value as of the 15th day of the month before the month of any annual percentage rate adjustment. The maximum ANNUAL PERCENTAGE RATE that can apply is 15.0%. The minimum ANNUAL PERCENTAGE RATE that can apply is 4.25% (except during an introductory period).

MAXIMUM RATE AND PAYMENT EXAMPLES
If you had an outstanding balance of $10,000.00 at the beginning of the draw period, the minimum monthly payment at the maximum ANNUAL PERCENTAGE RATE of 15.0% would be $150.00. This annual percentage rate could be reached during the first month of the draw period. If you had an outstanding balance of $10,000.00 at the beginning of the repayment period, the minimum monthly payment at the maximum ANNUAL PERCENTAGE RATE of 15.00% would be $161.47. This annual percentage rate could be reached after the first month of the repayment period.

HISTORICAL EXAMPLE
The following tables shows how the annual percentage rate and the minimum monthly payments for a single $10,000 credit advance would have changed based on changes in the index using a low and higher margin over the last 15 years. The index values are from the first business day of January of each year. While only one payment amount per year is shown, payments may have varied during each year. The table assumes that no additional credit advances were taken, that only the minimum payment was made, and that the rate remained constant during each year. It does not necessarily indicate how the index or your payments would change in the future.

Year Index Margin(%)* Annual Percentage Rate Minimum Payment
Draw Period
1992 6.500 0.000 6.250 $150.00
1993 6.000 0.000 6.000 $133.29
1994 6.000 0.000 6.000 $118.15
1995 8.500 0.000 8.500 $104.73
1996 8.500 0.000 8.500 $95.20
1997 8.250 0.000 8.250

$86.54
1998 8.500 0.000 8.500 $78.47
1999 7.750 0.000 7.750 $71.33
2000 8.500 0.000 8.500 $64.36
2001 9.500 0.000 9.500

$58.50
Repayment Period
2002 4.750 0.000 4.750 $50.00
2003 4.250 0.000 4.250 $50.00
2004 4.000 0.000 4.250 $50.00
2005 5.250 0.000 5.250

$50.00
2006 7.250 0.000 7.250

$50.00
 
Year Index Margin(%)* Annual Percentage Rate Minimum Payment
Draw Period
1992 6.500 4.000 10.500 $150.00
1993 6.000 4.000 10.000 $139.13
1994 6.000 4.000 10.000 $128.40
1995 8.500 4.000 12.500 $118.50
1996 8.500 4.000 12.500 $112.14
1997 8.250 4.000 12.250 $106.13
1998 8.500 4.000 12.500 $100.19
1999 7.750 4.000 11.750 $94.82
2000 8.500 4.000 12.500 $89.28
2001 9.500 4.000 13.500

$84.28

 

Repayment Period
2002 4.750 4.000 8.750 $53.68
2003 4.250 4.000 8.250 $52.19
2004 4.000 4.000 8.000 $51.49
2005 5.250 4.000 9.250 $54.81
2006 7.250 4.000 11.250

$59.96
*This is a margin we have used recently; your margin may be different. (eForm 54844-1b Rev 1/05)

WHAT YOU SHOULD KNOW
ABOUT HOME EQUITY LINES OF CREDIT
More and more lenders are offering home equity lines of credit. By using the equity in your home, you may qualify for a sizable amount of credit, available for use when and how you please, at an interest rate that is relatively low. Furthermore, under the tax law -depending on your specific situation - you may be allowed to deduct the interest because the debt is secured by your home.

If you are in the market for credit, a home equity plan may be right for you. Or perhaps another form of credit would be better. Before making a decision, you should weigh carefully the costs of a home equity line against the benefits. Shop for the credit terms that best meet your borrowing needs without posing undue financial risk. And remember, failure to repay the amounts you've borrowed, plus interest, could mean the loss of your home.

WHAT IS A HOME EQUITY LINE OF CREDIT? A home equity line is a form of revolving credit in which your home serves as collateral. Because the home is likely to be a consumer's largest asset, many homeowners use their credit lines only for major items such as education, home improvements, or medical bills and not for day-to-day expenses.

With a home equity line, you will be approved for a specific amount of credit - your credit limit, the maximum amount you may borrow at any one time under the plan.

Many lenders set the credit limit on a home equity line by taking a percentage (say, 75 percent) of the home's appraised value and subtracting from that the balance owed on the existing mortgage. For example,

Appraised value of home $100,000
Percentagex75% 
Percentage of appraised value =$75,000
Less balance owed on mortgage -$40,000
Potential credit$35,000 


In determining your actual credit limit, the lender will also consider your ability to repay, by looking at your income, debts, and other financial obligations as well as your credit history.

Many home equity plans set a fixed period during which you can borrow money, such as 10 years. At the end of this "draw period," you may be allowed to renew the credit line. If your plan does not allow renewals, you will not be able to borrow additional money once the period has ended. Some plans may call for payment in full of any outstanding balance at the end of the period. Others may allow repayment over a fixed period (the "repayment period"), for example, 10 years.

Once approved for a home equity line of credit, you will most likely be able to borrow up to your credit limit whenever you want. Typically, you will use special checks to draw on the line.

Under some plans, borrowers can use a credit card or other means to draw on the line. There may be limitations on how you use the line. Some plans may require you to borrow a minimum amount each time you draw on the line (for example, $300) and to keep a minimum amount outstanding. Some plans may also require that you take an initial advance when the line is set up.

WHAT SHOULD YOU LOOK FOR WHEN SHOPPING FOR A PLAN?
If you decide to apply for a home equity line of credit, look for the plan that best meets your particular needs. Read the credit agreement carefully, and examine the terms and conditions of various plans, including the annual percentage rate (APR) and the costs of establishing the plan. The APR for a home equity line is based on the interest rate alone and will not reflect the closing costs and other fees and charges, so you'll need to compare these costs, as well as the APRs, among lenders.

Interest Rate Charges and Related Plan Features.
Home equity lines of credit typically involve variable rather than fixed interest rates. The variable rate must be based on a publicly available index (such as the prime rate published in some major daily newspapers or a U. S. Treasury bill rate); the interest rate for borrowing under the home equity line changes, mirroring fluctuations in the value of the index. Most lenders cite the interest rate you will pay as the value of the index at a particular time plus a "margin," such as 2 percentage points. Because the cost of borrowing is tied directly to the value of the index, it is important to find out which index is used, how often the value of the index changes, and how high it has risen in the past as well as the amount of the margin.

Lenders sometimes offer a temporarily discounted interest rate for home equity lines -a rate that is unusually low and may last for only an introductory period, such as 6 months. Variable-rate plans secured by a dwelling must, by law, have a ceiling (or cap) on how much your interest rate may increase over the life of the plan. Some variable-rate plans limit how much your payment may increase and how low your interest rate may fall if interest rates drop. Some lenders allow you to convert from a variable interest rate to a fixed rate during the life of the plan, or to convert all or a portion of your line to a fixed-term installment loan. Plans generally permit the lender to freeze or reduce your credit line under certain circumstances. For example, some variable-rate plans may not allow you to draw additional funds during a period in which the interest rate reaches the cap.

Costs of Establishing and Maintaining a Home Equity Line.
Many of the costs of setting up a home equity line of credit are similar to those you pay when you buy a home. For example, (a) A fee for a property appraisal to estimate the value of your home; (b) An application fee, which may not be refunded if you are turned down for credit; (c) Up-front charges, such as one or more points (one point equals 1 percent of the credit limit); or (d) Closing costs, including fees for attorneys, title search, and mortgage preparation and filing; property and title insurance; and taxes.

In addition, you may be subject to certain fees during the plan period, such as annual membership or maintenance fees and a transaction fee every time you draw on the credit line. You could find yourself paying hundreds of dollars to establish the plan. If you were to draw only a small amount against your credit line, those initial charges would substantially increase the cost of the funds borrowed. On the other hand, because the lender's risk is lower than for other forms of credit, as your home serves as collateral, annual percentage rates for home equity lines are generally lower than rates for other types of credit. The interest you save could offset the costs of establishing and maintaining the line. Moreover, some lenders waive some or all of the closing costs.

HOW WILL YOU REPAY YOUR HOME EQUITY PLAN?
Before entering into a plan, consider how you will pay back the money you borrow. Some plans set minimum payments that cover a portion of the principal (the amount you borrow) plus accrued interest. But (unlike the typical installment loan) the portion that goes toward principal may not be enough to repay the principal by the end of the term. Other plans may allow payment of interest alone during the life of the plan, which means that you pay nothing toward the principal. If you borrow $10,000, you will owe that amount when the plan ends. Regardless of the minimum required payment, you may choose to pay more, and many lenders may offer a choice of payment options. Many consumers choose to pay down the principal regularly as they do with other loans. For example, if you use your lineto buy a boat, you may want to pay it off as you would a typical boat loan.

Whatever your payment arrangements during the life of the plan -whether you pay some, a little, or none of the principal amount of the loan -when the plan ends you may have to pay the entire balance owed, all at once. You must be prepared to make this "balloon payment" by refinancing it with the lender, by obtaining a loan from another lender, or by some other means. If you are unable to make the balloon payment, you could lose your home.

If your plan has a variable interest rate, your monthly payments may change. Assume, for example, that you borrow $10,000 under a plan that calls for interest-only payments. At a 10 percent interest rate, your monthly payments would be $83. If the rate rises over time to 15 percent, your monthly payments will increase to $125. Similarly, if you are making payments that cover interest plus some portion of the principal, your monthly payments may increase, unless your agreement calls for keeping payments the same throughout the plan period.

If you sell your home, you will probably be required to pay off your home equity line in full immediately. If you are likely to sell your home in the near future, consider whether it makes sense to pay the up-front costs of setting up a line of credit. Also keep in mind that renting your home may be prohibited under the terms of your agreement.

LINES OF CREDIT VS. TRADITIONAL SECOND MORTGAGE LOANS.
If you are thinking about a home equity line of credit, you might also want to consider a traditional second mortgage loan. A second mortgage provides you with a fixed amount of money repayable over a fixed period. In most cases the payment schedule calls for equal payments that will pay off the entire loan within the loan period. You might consider a second mortgage instead of a home equity line if, for example, you need a set amount for a specific purpose, such as an addition to your home.

In deciding which type of loan best suits your needs, consider the costs under the two alternatives. Look at both the APR and other charges. Do not, however, simply compare the APRs, because the APRs on the two types of loans are figured differently:

The APR for a traditional second mortgage loan takes into account the interest rate charged plus points and other finance charges.
The APR for a home equity line of credit is based on the periodic interest rate alone. It does not include points or other charges.


Disclosures from Lenders.
The federal Truth in Lending Act requires lenders to disclose the important terms and costs of their home equity plans, including the APR, miscellaneous charges, the payment terms, and information about any variable-rate feature. And in general, neither the lender nor anyone else may charge a fee until after you have received this information. You usually get these disclosures when you receive an application form, and you will get additional disclosures before the plan is opened. If any term (other than a variable-rate feature) changes before the plan is opened, the lender must return all fees if you decide not to enter into the plan because of the change.

When you open a home equity line, the transaction puts your home at risk. If the home involved is your principal dwelling, the Truth in Lending Act gives you 3 days from the day the account was opened to cancel the credit line. This right allows you to change your mind for any reason. You simply inform the lender in writing within the 3-day period. The lender must then cancel its security interest in your home and return all fees -including any application and appraisal fees -paid to open the account.

GLOSSARY
Annual membership or maintenance fee - An annual charge for having the line of credit available. Charged regardless of whether or not the line is used. Annual percentage rate (APR) - The cost of credit on a yearly basis expressed as a percentage.
Application fee - Fees that are paid upon application. May include charges for property appraisal and a credit report.
Balloon payment - A lump-sum payment that may be required when the plan ends.
Cap - A limit on how much the variable interest rate may increase during the life of the plan.
Closing costs - Fees paid at closing, including attorneys fees, fees for preparing and filing a mortgage, fees for title search, taxes, and insurance.
Credit limit - The maximum amount that may be borrowed under the home equity plan.
Equity - The difference between the fair market value (appraised value) of the home and the outstanding mortgage balance.
Index - Published rate that serves as a base for the interest rate charged on a home equity line and also as the base for rate changes used by the lender.
Interest rate - The periodic charge, expressed as a percentage, for use of credit.
Margin - The number of percentage points the lender adds to the index rate to determine the annual percentage rate.
Minimum payment - The minimum amount that you must pay (usually monthly) on your account. Under some plans, the minimum payment may cover interest only; under others, it may include both principal and interest.
Points - One point is equal to 1 percent of the amount of the credit line. Points must usually be paid at closing and are in addition to monthly interest.
Security interest - An interest that a lender takes in the borrower's property to ensure repayment of a debt.
Transaction fee - A fee charged each time you draw on your credit line.
Variable rate - An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly.

WHERE TO GO FOR HELP
The following federal agencies are responsible for enforcing the federal Truth in Lending Act, the law that governs disclosure of terms for home equity lines of credit. Questions concerning compliance with the act by a particular financial institution should be directed to the institution's enforcement agency.

Federal Credit Unions National Credit Union Administration, Office of Public and Congressional Affairs, 1775 Duke Street, Alexandria, VA 22314 Phone (703) 518-6330 Web: www.ncua.gov

State Chartered Credit Unions Federal Trade Commission, Consumer Response Center , 600 Pennsylvania Avenue, NW , Washington, D. C. 20580 Phone (202) 326-3758 or (877) FTC-HELP Web: www.ftc.gov

HOME EQUITY PLAN CHECK LIST
Ask your lender to help fill out this checklist.
  Plan A Plan B
BASIC FEATURES
Fixed annual percentage rate . . . . . . . . . . . . . . . . . . . . .
Variable annual percentage rate . . . . . . . . . . . . . . . . . .
Index used and current value . . . . . . . . . . . . . . . . .
Amount of margin . . . . . . . . . . . . . . . . . . . . . . . . . .
Frequency of rate adjustments . . . . . . . . . . . . . . . .
Amount/ length of discount (if any) . . . . . . . . . . . . . . .
Interest rate cap and floor . . . . . . . . . . . . . . . . . . . .
Length of plan
Draw period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Initial fees
Appraisal fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Application fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Up-front charges, including points. . . . . . . . . . . . . . . . .
Closing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
REPAYMENT TERMS
During the draw period
Interest and principal payments . . . . . . . . . . . . . . . . . .
Interest-only payments . . . . . . . . . . . . . . . . . . . . . . . . .
Fully amortizing payments . . . . . . . . . . . . . . . . . . . . . .
When the draw period ends
Balloon payment?. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Renewal available?. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refinancing of balance by lender? . . . . . . . . . . . . . . . .