This disclosure contains important information about your HomeFree FlexLine Account ("Account"). You should read it carefully and keep a copy for your records.

  1. Availability of Terms. All of the terms described below are subject to change. If any of these terms change (other than the ANNUAL PERCENTAGE RATE) and you decide, as a result, to not enter into an agreement with us, you are entitled to a refund of any fees that you paid in connection with your application.

  2. Security Interest. We will take a deed of trust on your home. You could lose your home if you do not meet the obligations in your agreement with us.

  3. Possible Actions. We may take the following actions with respect to your Account under the circumstances listed below:

    1. Termination and Acceleration. We may terminate your Account and require you to pay us the entire outstanding balance immediately, and charge you certain fees if any of the following happen:

      1. You engage in any fraud or material misrepresentation in connection with your Account. For example, if there are false statements or omissions on your application or financial statements.

      2. You do not meet the repayment terms of the Account.

      3. Your action or inaction adversely affects the collateral or our rights in the collateral. For example, if you fail to: maintain insurance, pay taxes, transfer title to or sell the collateral, prevent the foreclosure of any items, or waste of the collateral.

      4. The value of your dwelling securing the Account declines significantly below its appraised value.

      5. A default occurs under any other agreement you may have with us.

    2. Suspension of Credit/Reduction of Credit Limit. We may refuse to make additional advances on your line or reduce your credit limit during any period in which the following exist or occur:

      1. Any of the circumstances listed in a) above.

      2. We reasonably believe that you will not be able to meet the repayment requirements of the Account due to a material change in your financial circumstances.

      3. You are in default under any material obligation of your Account.

        All of your obligations under the Account (Agreement and Deed of Trust) are material to maintaining this Account. The categories of your obligations are set forth in the following paragraphs of these Agreements:

        HomeFree FlexLine Account Agreement and Disclosures. 1. Promise to Pay; 2. Account Access; 3. Loan Payments; 5. Security Requirements; 9. Other Charges and Closing Costs; 11. Possible Credit Union Actions; and 11.f. Credit Information/Financial Statements.

        Line of Credit Trust Deed. 3. Payment and Performance; 4. Possession and Maintenance of the Property; 5. Indemnity; 6. Due on Sale; 7. Taxes and Liens; 8. Property Damage Insurance; 10. Warranty/Defense of Title; 11. Condemnation; 12. Imposition of Taxes; 13. Security Agreement; 14. Further Assurances/Attorney in Fact; 16. Possible Actions of Lender; 20. Attorney Fees; and 25. Miscellaneous Provisions.

      4. The maximum ANNUAL PERCENTAGE RATE under your Account is reached.

      5. Any government action prevents us from imposing the ANNUAL PERCENTAGE RATE provided for or impairs our security interest such that the value of the interest is less than 120% of the credit line.

      6. We have been notified by a government agency that continued advances would constitute an unsafe and unsound practice.

    3. Change in Terms. The Agreement permits us to make certain changes to the terms of the Account at specified times or upon the occurrence of specified events.

  4. Minimum Draw Requirements. You must take an advance equal to the payoff balance on any existing liens on your home. We will use the initial draw amount to pay your payoff balance of the existing liens in order to allow Horizon Credit Union to place a first lien on your home. Also, depending on your credit quality, we may require you to pay off additional consumer debt as a condition of your loan approval. In case we require you to pay off additional consumer debt, the initial advance will equal the amount needed to pay off all existing liens on your home plus the additional consumer debt. There is no minimum amount for subsequent advances under the account.

    1. HomeFree FlexLine Variable Line of Credit.

      1. Draw Period. You can obtain credit advances for ten (10) years ("draw period"). During the draw period, payments will be due monthly. During the draw period, your minimum monthly payment will be equal to 1.00% of your Account balance at the end of the prior billing cycle, or $100.00, whichever is greater.

      2. Repayment Period. After the draw period ends, you will no longer be able to obtain advances and must repay the outstanding balance ("repayment period"). During the repayment period payments will be due monthly. The length of the repayment will vary based on changes in the ANNUAL PERCENTAGE RATE. The minimum monthly payment during the repayment period will be the amount necessary to payoff the Account in fifteen (15) years at the ANNUAL PERCENTAGE RATE at the beginning of the repayment period.

      3. Initial Draw Home Free FlexLine Sub Account. At the time your Account is established and an initial draw on your Account is made, the initial draw amount will be placed into a fixed rate sub account and used to pay amounts noted in section 4. After this initial draw, you will not be able to add any additional sums to your fixed rate sub account nor may you have any additional sub accounts. As you pay down the balance of the sub account an equal amount of principal becomes available for your use under the HomeFree FlexLine Line of Credit mentioned in a) above. Your minimum monthly payment amount will be the amount necessary to amortize the fixed rate sub account over a payment term of ten (10) years.

  5. Minimum Payment Examples. All rates and payments are examples only. Your rate or payment may be higher.

    1. Regular Account. If you took a single $10,000 advance at an ANNUAL PERCENTAGE RATE of 4.49% (the most recent index plus margin shown in the historical table) and made only the minimum monthly payments, it would take 300 months to pay off your Account. During that period you would make 120 monthly payments of $100.00, and 180 payments of $4.15.

    2. Fixed Rate Sub Account Loan. If you took a single $10,000 advance at an ANNUAL PERCENTAGE RATE of 3.99% and made only the minimum monthly payments, it would take 120 months to pay off your Account. During that period you would make 120 monthly payments of $101.20.

  6. Fees and Charges. There are no fees or charges paid to us directly or to third parties to open or maintain this Account. You may be required to reimburse us for certain charges we paid to third parties ("Third Party Charges") such as appraisers, credit reporting firms, and government agencies, if you terminate this Account within two years from the date of your initial advance. In addition, you must also carry insurance on the property that secures this Account. The amount of the Third Party Charges reimbursement depends on the amount of the line of credit, and generally total between $450 and $1492. For example, on a $10,000 line of credit/equity loan the following estimated charges may need to be reimbursed to us only if, again, you terminate the Account within two years of your initial advance.

    Flood Certificate (Finance Charge) $20
    Valuation Charge $150 - $900
    Title Insurance $75 - $300
    Reconveyance Charge $50 - $117
    Recording charge $75
    Tax Registration (Finance Charge) $60
    Credit Report Charge $10
    Wiring Charge (Finance Charge) $10

    The fees listed above are for example only. The actual fees incurred on your account may be higher. See the Itemization of Third Party and Creditor Fees for an estimate of fees specific to your account.

  7. Tax Deductibility. You should consult a tax advisor regarding the deductibility of interest and charges under the account.

  8. Annual Percentage Rate and Periodic Rate. The ANNUAL PERCENTAGE RATE is divided by 365 to obtain the Periodic Rate. The ANNUAL PERCENTAGE RATE includes only interest and not other costs.

  9. HomeFree FlexLine Fixed Rate Sub Account. For the fixed rate Sub Account, the Periodic Rate and ANNUAL PERCENTAGE RATE applicable to the balance will be determined at the time the Account is opened and will be fixed for a period of ten (10) years.

  10. HomeFree FlexLine Rate Features.

    1. ANNUAL PERCENTAGE RATE. The line of credit loan is a variable rate Account. Thus, the ANNUAL PERCENTAGE RATE and corresponding periodic rate may change. The ANNUAL PERCENTAGE RATE is based on the value of an index. The index is the Prime Rate as published in The Wall Street Journal (Western Edition) on the 15th day of each month (or the next business day after the 15th). To determine the ANNUAL PERCENTAGE RATE that will apply to your Account, we take the value of the index on the 15th day of each month (or the next business day after the 15th) and add a margin determined based on the loan amount and loan to value ratio, and round to the nearest one-eighth percentage point (0.125%). Due to the minimum ANNUAL PERCENTAGE RATE OF 4.49% ("Floor"), your initial rate may be greater than the index plus the margin used to make later rate adjustments. This will remain in effect so long as the index plus the margin is less than the floor. Ask us for the current index value, margin, discount, and ANNUAL PERCENTAGE RATE. After you open an Account, rate information will be provided on periodic statements that we will send you.

    2. Rate Changes. HomeFree FlexLine Rate. The variable ANNUAL PERCENTAGE RATE may change quarterly based on the index as of the 15th day of the previous month (or the next business day after the 15th). The maximum ANNUAL PERCENTAGE RATE that can apply over the life of the loan is six (6) percentage points over your initial index plus margin. After the initial adjustment, the ANNUAL PERCENTAGE RATE will not increase or decrease more than two (2) percentage points per calendar year. An increase or decrease in the ANNUAL PERCENTAGE RATE will affect the number of monthly payments or the amount of the final payment for your Account. However, if your monthly payment is insufficient to cover the accrued interest each month, we may increase your payment to the amount needed to cover the accrued interest. Otherwise, negative amortization will occur. Negative amortization increases the amount you owe us and decreases the equity in your home.

  11. Maximum Rate and Payment Examples. If you had an outstanding balance of $10,000 at the beginning of your Account, the minimum monthly payment at the maximum ANNUAL PERCENTAGE RATE of 9.25% (six percentage points above the index plus margin shown for the current year in the table below) would be $100.00 for a Regular Account. If you had an outstanding balance of $10,000 at the beginning of the repayment period, the minimum monthly payment at the rate would be $102.92 for Regular Accounts. This rate could be reached during the fourth year of the repayment period. Rates and payments shown are for example only. Your rate could be higher.

  12. Historical Example. The following table shows how the ANNUAL PERCENTAGE RATE and the minimum monthly payments for a single $10,000 credit advance on a home equity line of credit would have changed based on changes in the index over the last 15 years. The index values are from December 15 of the prior 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 each month, 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 (%) 1 Indexed Rate (%) Annual Percentage Rate (%) Flexline Minimum Monthly Payment ($) 4  
    1996 8.50 0 8.50 8.50 100.00  
    1997 8.25 0 8.25 8.25 100.00  
    1998 8.50 0 8.50 8.50 100.00  
    1999 7.75 0 7.75 7.75 100.00  
    2000 8.50 0 8.50 8.50 100.00  
    2001 9.50 0 9.50 9.50 100.00  
    2002 4.75 0 4.75 7.50 2 100.00  
    2003 4.25 0 4.25 5.50 2 100.00  
    2004 4.00 0 4.00 4.49 3 100.00 DRAW
    2005 5.00 0 5.00 5.00 100.00 PERIOD
    2006 7.25 0 7.25 7.00 2 33.68 REPAY
    2007 8.25 0 8.25 8.25 36.20 PERIOD
    2008 7.25 0 7.25 7.25 36.20  
    2009 4.00 0 4.00 5.25 2 36.20  
    2010 3.25 0 3.25 4.49 3 36.20  

    1 The margin listed above is representative of a total (fixed subaccount and flexline) loan amount at least $125,000, less than 50% LTV, and a minimum FICO of 720 for a stick built home. Therefore, your margin could be higher.

    2 The APR is limited to a 2% annual adjustment cap

    3 The APR may not be less than 4.49% (floor)

    4 This column assumes a flexline balance of $10,000 at year 1 with no future advances. The minimum payment is the greater of 1% or $100. The remaining balance at the repayment period is amortized at the rate shown in year eleven (11), amortized over a 15 year term. The minimum payment does not fluctuate with rate changes, therefore, the loan may be paid off sooner than 15 years or a balloon payment will be due at year 15. However, your payment may adjust periodically to avoid negative amortization. See your account agreement for more details on minimum payment calculations.

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