Home Equity Line of Credit
Terms & Disclosures

Home Equity Line Eligibility Criteria | Electronic Document Notice

Appraisal Notice Disclosure | Consumer Handbook

Please read, print, and retain the following documents for your records. If for any reason you cannot print the documents, please call us at 1-619-977-2262 or e-mail us at info@geckofinancial.com to request that a paper copy be sent to you by postal mail.

Home Equity Line Eligibility Criteria

Following are the minimum criteria that the borrower and/or property must meet for one to become eligible to receive a home equity line of credit through Gecko Financial Services:

1.       There cannot be more than two (2) owners of record of the property that will be used to secure the line of credit.

2.       The borrower must be an individual. Lender does not lend to trusts, partnerships or corporations.

3.       The property being used to secure the line of credit must be a primary residence or true vacation/second home. Investment or income producing properties are not eligible for this equity line program.

4.       The property used to secure the line must be a one- to two-unit property.

5.       The property used to secure the line must be permanently attached to real property. Mobile homes are not eligible for the equity line program.

6.       The borrower(s) must be a US citizen or permanent resident alien.

7.       The property must be located in California.

8.       The home equity line must be in first or second lien position at closing. Any existing liens on the property used to secure the home equity line, other than the first mortgage, must be paid prior to or with the proceeds from the home equity line of credit.

Electronic Document Notice

In choosing to conduct business with Gecko Financial Services via the Internet, we believe that you value the convenience of obtaining information quickly and efficiently.

In providing our products via the Internet, we deliver our contract terms and disclosures in an electronic format during our application processes. Please read the information carefully. This transaction is not available unless you agree to receive these documents electronically. Some information may be supplemented with paper documents where required by law or regulation.

Periodic statements of your home equity line of credit account activity also will be provided via electronic means. Monthly, you will be notified via e-mail, that your statement is available for you to view on the lender’s website. Also, at any time you will have the ability to view your account information by visiting that website.

To receive your contract, disclosure and account information electronically, please confirm that you have the following:

·             An internet browser (such as Netscape Navigator or Microsoft Internet Explorer 4.0x or higher) that supports 128-bit encryption (also called domestic- U.S. grade-, or strong encryption); and

·             The ability to print or download information from our website so that you can keep copies for your records.

Because we will primarily communicate with you via electronic means, it is important that we have your current e-mail address. To update your e-mail address, please call or e-mail us at the number/address shown below.

Home Equity Line of Credit Program Disclosure

This disclosure contains important information about the Home Equity Line of Credit. You should read it carefully and print a copy for your records. Availability of Terms: All of the terms described below are subject to change.

If these terms change (other than the annual percentage rate) and you decide, as a result, not to enter into an agreement with the lender, you are entitled to a refund of any fees that you paid to us or anyone else in connection with your application. Security Interest: Lender will take a mortgage on your home. You could lose your home if you do not meet the obligations in your agreement with us. Possible Actions: Under certain circumstances, Lender can (1) terminate your line and require you to pay us the entire outstanding balance in one payment; (2) refuse to make additional extensions of credit; and (3) reduce your credit limit.

Lender can terminate your account and require you to pay us the entire outstanding balance in one payment if:

(1) you engage in fraud or material misrepresentation in connection with the plan; (2) you do not meet the repayment terms; or (3) your action or inaction adversely affects the collateral or Lender’s rights in the collateral.

Lender can refuse to make additional extensions of credit or reduce your credit limit if:

(1) you engage in fraud or material misrepresentation in connection with the line; (2) you do not meet the repayment terms; (3) your action or inaction adversely affects the collateral or Lender’s rights in the collateral; (4) the value of the dwelling securing the line declines significantly below its appraised value for purposes of the line; (5) Lender reasonably believe you will not be able to meet the repayment requirements due to a material change in your financial circumstances; (6) you are in default of a material obligation of the agreement; (7) government action prevents Lender from imposing the annual percentage rate provided for or impairs Lender’s security interest such that the value of the interest is less than 120 percent of the credit line; or (8) a regulatory agency has notified us that continued advances would constitute an unsafe and unsound business practice.

Requesting An Advance:  You may request an advance of your Line of Credit by writing Home Equity Line of Credit checks that were given to you for this purpose.

Minimum Payment Requirements:  You can obtain credit advances for 5 year(s) (the "draw period"). At the end of five years, you may have the option to renew the "draw period," subject to Lender’s consent as to the renewal. During the draw period, payments will be due monthly. Your minimum monthly payment will equal the amount of accrued interest only. The minimum monthly payments during the draw period will not reduce the principal that is outstanding on your line.

After the draw period ends, you will no longer be able to obtain credit advances and must pay the outstanding balance on your account (the "repayment period"). The length of the repayment period is 20 year(s). During the repayment period, payments will be due monthly. Your minimum monthly payment will equal the amount of accrued interest plus 0.4167% of the principal loan account balance at the end of the draw period.

The minimum monthly payments may not be sufficient to fully repay the principal on your line by the end of the draw and repayment periods. If they are not, you will then be required to pay the entire balance in a single payment.

Minimum Payment Example: If you made only the minimum monthly payment and took no other credit advances, it would take 25 year(s) to pay off a credit advance of $10,000 at an ANNUAL PERCENTAGE RATE of 8.5%. During that period, you would make 60 payment(s) of $70.83 followed by 239 payment(s) varying between $112.50 and $41.64, with a final payment of $3,712.28.

Fees and Charges:  Gecko Financial Services nor the Lender charge any fees to open or maintain a home equity line of credit outside of late payment fees, insufficient funds fees, and fees for exceeding your credit limit. However, you may be subject to state fees and/or recordation taxes beyond Lender’s control limit.

Tax Deductibility:  You should consult a tax advisor regarding the deductibility of interest and charges for the plan.

Variable Rate Features : This plan 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. The annual percentage rate includes only interest and no other costs.

The annual percentage rate is based on the value of an index. The index is The Wall Street Journal Prime Rate as published in The Wall Street Journal. To determine the annual percentage rate that will apply to your account, Lender adds or subtracts 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 statements that are provided to you on Lender’s website.

Rate Changes: The annual percentage rate can change monthly after remaining fixed for thirty days, and is subject to a maximum percentage rate of 18%. The maximum ANNUAL PERCENTAGE RATE that can apply during the plan is 18%.

Maximum Rate and Payment Examples : If you had an outstanding balance of $10,000 at the beginning of the draw period, the minimum monthly payment at the maximum ANNUAL PERCENTAGE RATE of 18% would be $152.88. The maximum annual percentage rate during the draw period could be reached in the first month following an initial hold of thirty days.

If you had an outstanding balance of $10,000 at the beginning of the repayment period, the minimum monthly payment at the maximum ANNUAL PERCENTAGE RATE of 18% would be $191.67. The maximum annual percentage rate during the repayment period could be reached in the first month following an initial hold of thirty days.

Historical Examples: The following table shows how the annual percentage rate and the minimum payments for a single $10,000 credit advance would have changed based on changes in the index over the last 15 years. The index values are from the first business day of January. While only one payment amount per year is shown, payments would have varied during each year of the repayment period. 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.

(O) The repayment period begins in this year.

The lender has no obligation to refinance this loan at the end of its term. Therefore, you may be required to repay the loan out of assets you own or you may have to find another lender willing to refinance the loan. You should check with your legal advisor and with other mortgage lien holders as to whether any prior liens contain acceleration clauses which would be activated by a junior encumbrance.

This is not a commitment to make a loan.

Home Equity Line of Credit Consumer Handbook

The following handbook contains some general information about Home Equity Lines of Credit.

FEDERAL RESERVE BOARD

CONSUMER

HANDBOOK

________________________________________

About Home Equity Lines of Credit When Your Home is on the Line

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 this 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 line 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 -- meaning the maximum amount you can borrow at any one time while you have the plan.

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

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

Home equity plans often set a fixed time during which you can borrow money, such as 10 years. When this period is up, the plan may allow you to renew the credit line. But in a plan that does not allow renewals, you will not be able to borrow additional money once the time has expired. Some plans may call for payment in full of any outstanding balance. Others may permit you to repay over a fixed time, for example 10 years.

Once approved for the home equity plan, usually you will be able to borrow up to your credit limit whenever you want. Typically, you will be able to draw on your line by using special checks. Under some plans, borrowers can use a credit card or other means to borrow money and make purchases using the line. However, 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 lenders also may require that you take an initial advance when you first set up the line.

What Should You Look for When Shopping for a Plan?
If you decide to apply for a home equity line, look for the plan that best meets your particular needs. Look carefully at the credit agreement and examine the terms and conditions of various plans, including the annual percentage rate (APR) and the costs you'll pay to establish the plan. The disclosed APR 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 Plan Features. Home equity plans typically involve variable interest rates rather than fixed rates. A variable rate must be based on a publicly available index (such as the prime rate published in some major daily newspaper or a U.S. Treasury bill rate); the interest rate will change, mirroring fluctuations in the index. To figure the interest rate that you will pay, most lenders add a margin, such as 2 percentage points, to the index value. Because the cost of borrowing is tied directly to the index rate, it is important to find out what index and margin each lender uses, how often the index changes, and how high it has risen in the past.

Sometimes lenders advertise a temporarily discounted rate for home equity lines -- a rate that is unusually low and often lasts only for an introductory period, such as six months.

Variable rate plans secured by a dwelling must have a ceiling (or cap) on how high your interest rate can climb over the life of the plan. Some variable rate plans limit how much your payment may increase and also how low your interest rate may fall if interest rates drop. Some lenders may permit you to convert a variable rate to a fixed interest rate during the life of the plan, or to convert all or a portion of your line to a fixed-term installment loan.

Agreements generally will permit the lender to freeze or reduce your credit line under certain circumstances. For example, some variable rate plans may not allow you to get additional funds during any period the interest rate reaches the cap.

Costs to Obtain a Home Equity Line. Many of the costs in setting up a home equity line of credit are similar to those you pay when you buy a home. For example:

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 charges and closing costs would substantially increase the cost of the funds borrowed.

On the other hand, the lender's risk is lower than for other forms of credit because your home serves as collateral. Thus, annual percentage rates for home equity lines are generally lower than rates for other types of credit. The interest you save could offset the initial costs of obtaining the line. In addition, some lenders may waive a portion 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 any money you might 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 debt by the end of the term. Other plans may allow payments 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 entire sum when the plan ends.

Regardless of the minimum payment required, you can pay more than the minimum, and many lenders may give you a choice of payment options. Consumers often will choose to pay down the principal regularly as they do with other loans. For example, if you use your line to 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.

With a variable 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 initial payments would be $83 monthly. If the rate should rise over time to 15 percent, your payments will increase to $125 per month. Even with payments that cover interest plus some portion of the principal, there could be a similar increase in your monthly payment, unless the agreement calls for keeping payments level throughout the plan.

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

Comparing a Line of Credit and a Traditional Second Mortgage Loan

If you are thinking about a home equity line of credit, you also might want to consider a more traditional second mortgage loan. This type of loan provides you with a fixed amount of money repayable over a fixed period. Usually the payment schedule calls for equal payments that will pay off the entire loan within that time. You might consider a traditional second mortgage loan 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 the APR and other charges. You cannot, however, simply compare the APR for a traditional mortgage loan with the APR for a home equity line because the APRs are figured differently.

Disclosures from Lenders. The 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 has changed before the plan is opened (other than a variable-rate feature), the lender must return all fees if you decide not to enter into the plan because of the changed term.

When you open a home equity line, the transaction puts your home at risk. For your principal dwelling, the Truth in Lending Act gives you three 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 creditor in writing within the three-day period. The creditor must then cancel the security interest in your home and return all fees -- including any application and appraisal fees -- paid in opening the account.

GLOSSARY

Where to Go for Help

The following federal agencies are responsible for enforcing the federal Truth in Lending Act, the law that governs credit term disclosures for home equity lines. Any questions concerning compliance with the act by a particular financial institution should be directed to its enforcement agency.

Fair Lending Policy

Our policy is to comply with the laws that help to assure fair lending including the Equal Credit Opportunity Act, the Fair Housing Act, the Home Mortgage Disclosure Act and other applicable regulations that prohibit discrimination on the following bases:

·         Race

·         Color

·         Religion

·         National Origin

·         Sex

·         Marital Status

·         Handicap Status

·         Familial Status

·         Age

·         Age or Location of the Dwelling

·         That all or part of the applicant's income is derived from a public assistance program

·         Good faith exercise of rights under the Consumer Credit Protection Act

Gecko Financial Services’ non-discrimination commitment extends to all of our business practices including our website development, marketing and solicitation strategies, sales, underwriting and pricing practices, customer service and collection procedures.
If you believe you have been discriminated against, you should send a complaint to: Gecko Financial Services at info@geckofinancial.com Or write to us at:

Gecko Financial Services
2295 Needham Road #25
El Cajon, CA 92020

Equal Housing Lender Notice

We do business in accordance with Federal Fair Lending Laws.
Under the Federal Fair Housing Act, it is illegal, on the basis of race, color, national origin, religion, sex, handicap, or familial status (having children under the age of 18), to:

1.       Deny a loan for the purpose of purchasing, constructing, improving, repairing or maintaining a dwelling, or deny any loan secured by a dwelling; or

2.       Discriminate in fixing the amount, interest rate, duration, application procedures or other terms or conditions of such a loan, or in appraising property.

If you believe you have been discriminated against, you should send a complaint to:

Assistant Secretary for Fair Housing and Equal Opportunity
Department of Housing & Urban Development
Washington, DC 20410
(For processing under the Federal Fair Housing Act)

And to:

Director, Consumer Affairs
Office of Thrift Supervision
Washington, D.C. 20552
(For processing under Office of Thrift Supervision Regulations)

Under the Equal Credit Opportunity Act, it is illegal to discriminate in any credit transaction:

·         On the basis of race, color, national origin, religion, sex, marital status, or age;

·         Because income is from public assistance; or

·         Because a right was exercised under the Consumer Credit Protection Act.

If you believe you have been discriminated against, you should send a complaint to:

Director, Consumer Affairs
Office of Thrift Supervision
Washington, D.C. 20552

Gecko Financial Services is a licensed Real Estate Broker by the California Department of Real Estate.  Our License Number is 01202986.  To file a complaint, please contact the Department at:

California Dept. of real Estate
2201 Broadway
Sacramento, CA 95818-2500
(916)227-0931

Return to top