Home equity line of credit disclosure
Helpful information and legal disclosures regarding a home equity line of credit.
IMPORTANT TERMS OF HOME EQUITY LINE OF CREDIT ACCOUNT
In this disclosure, the words "you" and "your" means each person who signs the last page of this disclosure, and the words "we," "us," "our" and the "Bank" mean Ameriprise Bank, FSB.
This disclosure contains important information about our Home Equity Line of Credit Account (the "Account"). You should read this disclosure carefully. After you have read and reviewed this disclosure, please sign the last page of this document and return it to the Bank as acknowledgment of your receipt of this disclosure. Prior to sending, please make a copy of this document for your records and future reference.
1. Availability of Terms
(a) Terms May Change. The terms described below are subject to change before the Bank receives and acts on your application.
(b) Refund of Fees. If these terms change (other than the Annual Percentage Rate, which is an adjustable 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 anyone else in connection with your application.
2. Security Interest
If you are approved for an Account, we will take a mortgage on your home. You could lose your home if you do not meet the obligations in your agreement with us.
3. Possible Actions
(a) We Can Terminate Your Account. We can terminate your Account and require you to pay us the entire outstanding balance in one payment, and charge you certain fees if:
- You engage in fraud or material misrepresentation in connection with your application and/or the Account.
- You do not meet the repayment terms of the Account.
- Your action or inaction adversely affects the collateral for the Account or our rights in the collateral.
- The value of the dwelling securing your Account declines significantly below its appraised value for purposes of the Account.
- We reasonably believe you will not be able to meet the repayment requirements due to a material change in your financial circumstances.
- You are in default of a material obligation of the Account.
- Government action prevents us from imposing the Annual Percentage Rate provided for under the Account or impairs our security interest such that the value of the interest is less than 120% of the credit line.
- A regulatory agency has notified us that continued advances would constitute an unsafe or unsound business practice.
4. Minimum Payment Requirements
(a) Draw Period. Except as described above, you can get loan advances under your Account for 10 years. The period during which you may get loan advances is called the "Draw Period." During the Draw Period, payments will be due monthly. We may, in our sole discretion, extend your Draw Period.
(b) Draw Period Payment. Your minimum monthly payment during the Draw Period will
equal the greater of all finance charges that have accrued during the prior
billing cycle or $25, plus any other charges, any credit insurance premiums, and
any amounts which are past due or in excess of your credit limit. In addition,
balances of less than $25 must be paid in full. The minimum monthly payment will
not reduce the outstanding principal balance on your Account by the end of the
Draw Period.
(c) Repayment Period. After the Draw Period ends, you will no longer be able to get loan advances, and you must pay us all amounts you owe under your Account over a period of 15 years. This 15 year period is called the "Repayment Period."
(d) Payments During the Repayment Period. During the Repayment Period, your minimum monthly payment will be an amount equal to the greater of (i) the sum of (a) the unpaid principal balance divided by the remaining number of scheduled billing cycles in the Repayment Period, plus (b) all finance charges that have accrued during the prior billing cycle, plus (c) any other charges assessed to your Account, any credit insurance premiums, and any amounts which are past due or in excess of your credit limit, or (ii) $25. In addition, balances of less than $25 must be paid in full.
5. Minimum Payment Example
If you took a single $10,000 advance and the ANNUAL PERCENTAGE RATE was 4.50%, it would take 300 months to pay off the advance if you made only the minimum payments. During that time, you would make 120 monthly payments during the Draw Period of $36.99, followed by 180 monthly payments during the Repayment Period starting at $92.54 and declining to $55.76 on the last payment.
6. Fees and Charges
(a) Payment of Closing Costs. If your Credit Limit is $250,000 or less, we will pay on your behalf the closing costs as applicable to your Account referenced below and which appear on the HUD-1 Settlement Statement ("Closing Costs"). If your Credit Limit is greater than $250,000, we will pay on your behalf the Closing Costs referred to below to a maximum of $2,000.
- Third Party Closing Costs.
- Appraisal fees
- Title insurance
- Title Search
- Title Exam fees
- Tax Certification
- Attorney/notary Fees
- Trust Certificate/Review
- Courier Fees
- Lender-Paid Closing Costs.
- Credit report fee
- Flood certificate
- MERS registration fee
- Settlement/Closing fees
- FACT policy
- Property report
(b) Mortgage Taxes. The Bank will pay all mortgage tax costs provided that the Borrower agrees to a rate adjustment of 0.25% (0.50% for property located in any of the five boroughs of New York City).
(c) Recovery of Closing Costs. Notwithstanding our Agreement to pay some or all of the Closing Costs on your behalf, you agree to reimburse us 100% of the Closing Costs paid by us if you close your line of credit within 36 months after the Closing Date. You also agree to reimburse us the Closing Costs paid by us if, within such time period, we terminate or suspend your right to received advances or because you are in default.
(d) Property Insurance. You must carry hazard insurance (including flood insurance, if required) on the property that secures your Account.
7. Minimum Draw and Credit Line Requirements
(a) Minimum Draw. The minimum credit advance that you can receive is $100.
(b) Minimum Credit Line. The minimum credit line that you can receive is $15,000.
8. Tax Deductibility
You should consult a tax advisor regarding the deductibility of interest and charges under the Account.
9. Variable Rate Feature
Your Account has a variable rate feature, and the Annual Percentage Rate (corresponding to the periodic rate) and the minimum monthly payment can change as a result. (See Section 11 below.) The Annual Percentage Rate includes only interest and not other costs.
(a) Variable Rate Index. The Annual Percentage Rate is based on the value of an index (the "Index"). The Index is the highest domestic "Prime Rate" listed in the "Money Rates" section of The Wall Street Journal (eastern edition) as of the first business day of the calendar month in which the billing cycle begins.
(b) How We Figure Your APR. We figure the variable Annual Percentage Rate by adding a "margin" to the value of the Index.
(c) Ask Us For Current Information. Ask us for the current Index values, margins and Annual Percentage Rates.
(d) Information On Periodic Statements. After you open an Account, rate information will be provided on periodic statements that we send you.
10. Preferred Rate
You may be entitled to receive a "Preferred Rate" on your Account. The Preferred Rate is a reduction of your ANNUAL PERCENTAGE RATE by 0.25%. You will be eligible for the Preferred Rate if you are an Achiever Circle Elite client of Ameriprise Financial, Inc. If you cease to be an Achiever Circle Elite client of Ameriprise Financial, Inc. for any reason, your Preferred Rate will be eliminated and your ANNUAL PERCENTAGE RATE will increase by 0.25%. The increase will take place on the first day of the billing cycle immediately following the month in which you cease to be an Achiever Circle Elite client. We may reinstate your Preferred Rate at any time in our sole discretion.
11. Rate Changes
Your ANNUAL PERCENTAGE RATE can change on the first day of each monthly billing cycle, based on the value of the Index published on the first business day of the calendar month in which the billing cycle begins. The maximum ANNUAL PERCENTAGE RATE that can apply to your Account is 16.00% (the "Rate Cap"). The minimum ANNUAL PERCENTAGE RATE that can apply to your Account is 4.00% (the "Rate Floor"). Apart from the Rate Cap and the Rate Floor, there is no limit on the amount by which the rate can change during any 1-year period or over the life of your Account.
The ANNUAL PERCENTAGE RATE will change without prior notice to you. Your new ANNUAL PERCENTAGE RATE will apply to your then existing unpaid principal balance and all new loans that you obtain under your Account until the Index changes again. Your daily periodic rate at any time will equal your ANNUAL PERCENTAGE RATE divided by 365 (366 during a leap year).
12. Maximum Rate And Payment Examples
(a) Draw Period If, at the beginning of the Draw Period, the ANNUAL PERCENTAGE RATE equaled the 16.00% maximum (the Rate Cap) and you had an outstanding balance of $10,000, the minimum monthly payment would be $131.51. The maximum ANNUAL PERCENTAGE RATE (the Rate Cap) could be reached during the first month of the Draw Period.
(b) Repayment Period If, at the beginning of the Repayment Period, the ANNUAL PERCENTAGE RATE equaled the 16.00% maximum (the Rate Cap) and you had an outstanding balance of $10,000, the minimum monthly payment would be $187.06. The maximum ANNUAL PERCENTAGE RATE (the Rate Cap) could be reached during the first month of the Repayment Period.
13. Historical Examples
The following table shows how the Annual Percentage Rate would have changed on your Account based on changes in the Index over the past 15 years. The table also shows the value of the minimum payment based on a single $10,000 credit advance at the beginning of the Draw Period. The table assumes a 10-year Draw Period (with no Renewal Draw Period). Index values are the values in effect on the first business day of January of each year. While only one payment amount per year is shown, payments would have varied during each year.
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The table assumes that no additional credit advances were taken and that only the minimum payment was made each month. The table does not necessarily indicate how the Index or your payments would change in the future.
| Year ($) | Index (%)1 | Margin (%)2 | Annual Percentage Rate (%) |
Minimum Monthly Payment ($) |
|
| Draw Period | 1995 | 8.50% | 0.50% | 9.90% | $73.97 |
| 1996 | 8.50% | 0.50% | 9.90% | $73.97 | |
| 1997 | 8.25% | 0.50% | 8.75% | $71.92 | |
| 1998 | 8.50% | 0.50% | 9.00% | $73.97 | |
| 1999 | 7.75% | 0.50% | 8.25% | $67.81 | |
| 2000 | 8.50% | 0.50% | 9.00% | $73.97 | |
| 2001 | 9.50% | 0.50% | 10.00% | $82.19 | |
| 2002 | 4.75% | 0.50% | 5.25% | $43.15 | |
| 2003 | 4.25% | 0.50% | 4.75% | $39.04 | |
| 2004 | 4.00% | 0.50% | 4.50% | $36.99 | |
| Repayment Period | 2005 | 5.25% | 0.50% | 5.75% | $102.82 |
| 2006 | 7.25% | 0.50% | 7.75% | $119.25 | |
| 2007 | 8.25% | 0.50% | 8.75% | $127.47 | |
| 2008 | 7.25% | 0.50% | 7.75% | $119.25 | |
| 2009 | 3.25% | 0.50% | 4.00%3 | $88.43 |
2This is a margin we have used recently. Your margin may be different.
3Although the index plus margin is 3.75%, the rate floor for this product is 4.00%.
For additional information, click below to download a helpful document from the U.S Department of Housing and Urban Development.
When Your Home Is on the Line: What You Should Know about Home Equity Lines of Credit (PDF)
