Valwood Park Federal Credit Union  


This information sheet is provided to assist you in understanding the procedures and documentation needed in order to apply for an Equity loan. Remember, the interest on Equity loans can be tax deductible. If you need any further information on Tax Related matters please call your accountant. Please note that an Equity Loan CANNOT be rolled into a refinance of your existing Mortgage.

The first step requires that you determine your ability to qualify for this type of Loan.   You will need to maintain a 20% equity margin in your home. This means that your Loan to Value ratio will have to be below 80% EVEN with the new loan added to the total outstanding debt.

1)   Determine the MARKET VALUE of your home. In some instances, you can use a Tax Statement that is dated within the last twelve months as a conservative estimate of the MARKET VALUE. We may also be able to accept a Comparative Market Analysis from a realtor. Some instances may require that an appraisal be obtained. Normally, your equity margin will determine which approach is acceptable.

2)   Then, determine the EQUITY of your HOMESTEAD as follows:
        a) Subtract the (BALANCE OWED ON YOUR HOME) from the (MARKET VALUE) = Current Equity.
        b) Now, add in the amount of your loan request and re-check your equity position.  

Remember, you must stay below 80% Loan to Value ...even after the loan request amount is added to your current Balance Owed.

Example:

Assume that your Market Value = 180K (so,   80% of 180K = 144K which is the highest debt that you can have on this homestead to qualify for an Equity Loan) Balance Owed = 100K Equity = 80K or 56% Loan to Value. This means that you have an available Equity of 24%. This means you multiply this 24% x 144k which equals = $ 43,200. So, the maximum loan amount for an Equity Loan on this property would be $ 43,200.


3) Along with the Loan Application, you will need to make copies of the documents necessary for Loan Approval. The documents which are necessary are as follows:

a) Deed of Trust - this document passes title to the property from the seller to a trustee until mortgage is paid. Please note the Warranty Deed guarantees that the title ,from the seller to the buyer, is unencumbered, however, the Deed of Trust is the recorded document showing that the sale has been finialized and recognized by all parties.

b) Copy of Title Insurance Policy ( this document protects the home owner from any unknown claims to the property )

c) Insurance on Home with Statement on Flood Insurance. Please contact your insurance agent and have them fax us a current policy.

d) Tax Statement. Please remember that a Comparative Market Analysis or Appraisal may be necessary for loan approval.

e) Statement of Balance on Home. Please contact your Mortgage Lender and have them fax us a current balance statment.

f) Pay Stub(s) or a recent tax return

There is a processing fee for equity loans which includes the cost for document preparation and for the title search. The normal fee will be approximately $450.00.


4) There is a Mandatory 12 day waiting period from the date of application for Equity Loans. Also, there is Mandatory waiting period of 3 Business Days to fund the loan after the loan documents are signed. Complete the Loan Application on-line and submit the Application to the Credit Union with the other required documents.   You can FAX documents to (972) 245 - 6783.   We can process your request from the FAX documents.