This disclosure contains important information about the home equity line of credit provided by us, Pay At Close Loans Inc. (“Pay At Close Loan”). You should carefully read this disclosure and keep a copy for your records.
AVAILABILITY OF TERMS. All of the terms described below are subject to change prior to opening the Line. If these terms change 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 paid to us or to anyone else in connection with your application for a Pay At Close Home Equity Line of Credit
SECURITY INTEREST. We will take a security interest in your house. You could lose your house if you do not meet the obligations in your agreement with us.
POSSIBLE ACTIONS. Under certain circumstances, we can: (1) terminate your Pay At Close Home Equity Line of Credit, require you to pay us the entire outstanding principal balance in one payment, and charge you certain fees; (2) refuse to make additional extensions of credit; (3) reduce your credit limit.We can terminate your account, require you to pay us the entire outstanding balance in one payment, and charge you certain fees if: (1) you engage in fraud or material misrepresentation, by your actions or failure to act, in connection with any phase of your line of credit; (2) you do not meet the repayment terms of the Pay At Close Home Equity Line of Credit; (3) your action or inaction adversely affects the collateral or our rights in the collateral.
We can refuse to make additional extensions of credit or reduce your credit limit if: (1) the value of the dwelling securing the line declines significantly below its appraised value for purposes of the line; (2) we reasonably believe you will not be able to meet the repayment requirements due to a material change in your financial circumstances; (3) you are in default of a material obligation of the agreement; (4) government action prevents us from imposing the annual percentage rate provided for in the agreement; (5) government action impairs our security interest such that the value of the interest is less than 120 percent of the line of credit; (6) a regulatory agency has notified us that continued advances constitute an unsafe and unsound business practice; (7) the maximum annual percentage rate is reached.
We may also make specific changes to the plan that are set forth in your agreement with us, at specified times or upon the occurrence of specified events. If you ask, we will give you more specific information about when we can take these actions.
PAYMENT TERMS. The Pay At Close Home Equity Line of Credit includes both a “Draw Period” and a “Repayment Period,” and different payment terms apply to each period.
LENGTH OF LINE. The “Origination Date” is the date PAC Loans opens your account for a Pay At Close Home Equity Line of Credit. You can obtain advances of credit during the Draw Period, up to your credit limit. If you do not repay all advances of credit and the Pay At Close Home Equity Line of Credit Fees, set out below, during or at the conclusion of the Draw Period, you will be required to repay them during the Repayment Period,
The Draw Period begins on the Origination Date and concludes on the earlier of: (1) the date you sell the house that you have pledged as security for the Pay At Close Home Equity Line of Credit, at which time you must pay the full amount you owe; or (2) six months after the Origination Date.
The Repayment Period begins on the day following six months after the Origination Date if the house has not been sold and/or the full amount you owe has not been repaid by the end of the Draw Period. The Repayment Period is eighteen (18) months.
REPAYMENT ON THE SALE OF YOUR HOUSE. When you sell your house, you are required to pay the full amount that you owe, which will include (1) any advances of credit you have not yet repaid; (2) the Pay At Close Home Equity Line of Credit Fees, set out below; and (3) all accrued but unpaid interest.
NO PAYMENTS DUE DURING THE DRAW PERIOD. You are not required to make any minimum payments during the Draw Period, although you may choose to do so. If during the Draw Period you choose to repay any amount that you have borrowed (i.e., some or all of an advance), the amount of credit available to you during the Draw Period will be replenished.
MINIMUM PAYMENTS DURING THE REPAYMENT PERIOD. You must make monthly payments beginning in the seventh month of the Repayment Period. The amount of your monthly payment will equal the amount of interest accrued as of the end of each billing cycle. Your minimum payments during the Repayment Period will not repay the balance owed on your line. You will be required to pay the entire outstanding balance in a single balloon payment at the end of the Repayment Period.
Minimum Payment Example: If you borrowed $10,000 (including the amount of the Pay At Close Home Equity Line of Credit Fees) during the Draw Period and you made only the required minimum payments during both the Draw Period and Repayment Period, it would take 24 months to repay your Home Equity Line of Credit. During that period, if your APR were 10.99% you would make no payments for 12 months, then 11 interest-only payments of $91.58 each followed by a final payment of $11,114.80.
NEGATIVE AMORTIZATION. Because no payments are required until the seventh month of the Repayment Period, your minimum payments will not cover the finance charges that accrue, and “negative amortization” will occur if you make only the required minimum payments. Negative amortization will increase the amount that you owe us and reduce your equity in your home.
FEES AND CHARGES: To open and maintain a Pay At Close Home Equity Line of Credit, you must pay us the following fees, due at the earlier of: (1) when you sell your house; (2) at the end of the Repayment Period:
PAY AT CLOSE HOME EQUITY LINE OF CREDIT FEES: The Home Equity Line of Credit Fees are comprised of: (i) Origination Fee (FINANCE CHARGE), (ii) Recording Fee, and (iii) Reconveyance Fee. The Origination Fee (FINANCE CHARGE) equals 1.99% of the maximum amount that you are permitted to borrow (your credit limit) for your Pay At Close Home Equity Line of Credit. There are no other closing costs or fees collected in connection with the Pay at Close Home Equity Line of Credit, other than the Origination Fee, the Recording Fee, and Reconveyance Fee. If you ask us, we will provide an estimate of the Recording Fee and Reconveyance Fee. Unless you exercise your right to rescind the transaction as disclosed to you separately, you must pay the Home Equity Line of Credit Fees, even if you later choose to not obtain any advance of credit or to close your account before you obtain any advance of credit.
ANNUAL PERCENTAGE RATE AND PERIODIC RATE: Interest begins to accrue beginning in the fourth month of the Account. The Annual Percentage Rate is fixed. A recent fixed ANNUAL PERCENTAGE RATE we have offered is 10.99%. For accounts with a credit limit of $50,000 or more and first lien position, a recent fixed ANNUAL PERCENTAGE RATE we have offered is 8.99%. The ANNUAL PERCENTAGE RATE is divided by 365 to produce the daily Periodic Rate. The ANNUAL PERCENTAGE RATE includes only interest and not other costs.
NO MINIMUM DRAY REQUIREMENT: You are not required to request any minimum amount of a credit advance for your Pay At Close Home Equity Line of Credit. However, even if you do not request any advances, you will still owe the Pay At Close Home Equity Line of Credit Fees.
NO PREPAYMENT FEE: You may repay any or all of the amount of your Pay At Close Home Equity Line of Credit— including Pay At Close Home Equity Line of Credit Fees—at any time. You will not be charged a fee for paying all of the amounts that you owe before the Draw or Repayment periods end.
TAX DEDUCTABILITY: You should consult a tax advisor regarding the deductibility of interest and charges for the line of credit.
APPRAISAL OR VALUATION: We may order an appraisal or other valuation to determine the property’s value. We will promptly give you a copy of any appraisal, even if your loan does not close. You can pay for an additional appraisal for your use at your own cost.
CFPB BROCHURE: You should review important information about a home equity line of credit provided by the Consumer Financial Protection Bureau, which is provided to you along with this disclosure, and is also available here:
https://files.consumerfinance.gov/f/documents/cfpb_what-you-should-know-about-heloc_booklet.pdf
Additional information you should know about accessing and repaying your secured line of credit
YOUR AVAILABLE CREDIT LINE. On the Origination Date, PAC Loans provides you with a line of credit up to an established limit. Your maximum line of credit amount is the “Established Limit.” You are permitted to request a line of credit in any amount, but you may not request an amount that would exceed that Established Limit. The amount you request of your Established Limit is your “Credit Limit.” You are permitted to request an advance on the Credit Limit in any amount, but you may not request an amount that would exceed that Credit Limit. However, the Credit Limit for your line of credit does not include any Pay At Close Home Equity Line of Credit Fees during the Draw Period. You are allowed to add the Pay At Close Program Fees to the overall amount financed in your account.
You may request the maximum amount of the line of credit that you wish for us to consider making available to you. Based on the information you submit to us in your application and the PAC Loans underwriting process, PAC Loans will determine whether to establish an account for you to obtain a Pay At Close Home Equity Line of Credit. If PAC Loans does establish an account for you, PAC Loans will establish the Established Limit for your Pay At Close Home Equity Line of Credit.
The amount of the Origination Fee that you will be obligated to pay is based on the Credit Limit, not the actual amount of the advances you receive from us.
You are responsible for determining and requesting the maximum amount you may need to borrow (i.e., your credit limit). When you do so, you need to be aware that the Credit Limit for your Pay At Close Home Equity Line of Credit will determine the amount of the Origination Fee (FINANCE CHARGE) you must pay.
For example: If you request a maximum line of credit of $10,000, and we determine that the Principal Amount that you are permitted to borrow for your Pay At Close Home Equity Line of Credit will be $10,000, the Origination Fee would be $199.00. Unless you exercise your right to rescission, you would be required to pay $199.00. If you request a maximum line of credit that is higher than $10,000, and PAC Loans determines that you qualify for a higher Credit Limit, then the amount of the Origination Fee you must pay also will be higher.
FULL PAYMENT IS DUE WHEN YOU SELL YOUR HOUSE. You will be required to pay all of the amounts you owe—i.e., the Pay At Close Home Equity Line of Credit Fees and the full balance of the amount you borrow for your Pay At Close Home Equity Line of Credit—when you sell your house.
Failing to Pay the Full Amount On Sale of Your House Is an Event of Default. If you sell your house but do not pay the full amount that you owe, you will be in default on your repayment obligations. We may impose default interest on the outstanding balance you owe.