IMPORTANT TERMS OF OUR HOME SECURED LINE OF CREDIT

FLEXIBLE OPTION PLAN

KeyPoint Credit Union offers a Flexible Option Plan Home Secured Line of Credit. The Flexible Option Plan allows some qualified applicants to chose fixed introductory rates for six months, 3 years, 5 years or 7 years, followed by a variable rate as low as Prime. Some applicants may be approved for a KeyPoint Home Secured Line of credit even if they do not qualify for a fixed introductory rate. The terms for which you qualify will be disclosed to you if your application is approved.

This disclosure contains important information about our real estate secured open-end loan account. You should read it carefully and keep a copy for your records.

Availability of Terms: All of the terms described are subject to change prior to a final decision on your loan application. If any of these terms change (other than the annual percentage 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 paid in connection with your application.

Security Interest: The loan account will be secured by a Deed of Trust on your home. You could lose your home if you do not meet the obligations in your agreement with us.

Possible Actions: We can terminate your loan account and require you to pay the entire outstanding balance in one payment and also charge you certain fees for any one of the following reasons:

      *        You engage in fraud or material misrepresentation in connection with this loan account.

      *        You do not make payments as scheduled.

      *        The security for the loan is impaired.

We can also refuse to make additional extensions of credit, or reduce your credit limit, if:

      *        The security is worth significantly less than its value at the time you applied for the loan account.

      *        Your financial circumstances have materially declined.

      *        You are in default in a material obligation under the loan contract.

*        Government action prevents us from continuing to use the annual percentage rate formula or making further loan advances under the account terms.

*        A governmental agency takes some action that has the effect of impairing our security interest in your home, such as the imposition of a tax lien.

*        The California Department of Financial Institutions, National Credit Union Administration, or other regulatory agency advises us that further extensions of credit would be unsafe and unsound under the circumstances.

      *        The maximum Annual Percentage Rate provided under the formula is reached.

The loan agreement allows the lender to make certain changes such as in the interest rate or on the occurrence of certain events such as your default.  You will be able to obtain loan advances for 15 years.

Minimum Advance: A $20,000.00 opening advance is required.  Subsequent advances may be in any amount.

Minimum Payment Requirements: Your minimum monthly payment varies with the amount borrowed and changes in the interest rate. Your minimum payment will equal interest only during the 15-year draw period. A 15-year repayment period will follow the draw period. During the repayment period, you will make fully amortized payments sufficient to pay off the loan in full by the end of the repayment period. If your outstanding balance is less than $100.00, you must pay it in full.

Minimum Payment Examples:  If you made only the minimum monthly payments and took no other loan advances, you would make 360 payments to pay off a loan advance of $10,000.00 at an initial ANNUAL PERCENTAGE RATE of 3.99%. During the draw period, you would make 180 monthly interest-only payments of $33.89. During the repayment period, you would make 179 fully amortized payments of $73.92 and a final payment of $73.92. If you made only the minimum monthly payments and took no other loan advances, you would make 360 payments to pay off a loan advance of $10,000.00 at an initial ANNUAL PERCENTAGE RATE of 8.25%. During the draw period, you would make 180 monthly interest-only payments of $68.75. During the repayment period, you would make 179 fully amortized payments of $97.05 and a final payment of $94.19. These payment amounts assume the interest rate remains constant. Increases in the interest rate increase the amount of the required minimum payment during both the draw and repayment periods.

Fees and Charges: If the credit limit is $500,000 or less, you will generally not have to pay any fees or costs to establish a loan account. If the credit limit is over $500,000, you will generally have to pay for title insurance at an estimated cost of $900 to $4,135, depending on the amount of the credit limit requested and the lien position, but you will not pay any other fees or costs to establish a loan account. Fees and costs to establish all Loan Accounts typically include document preparation, credit report, appraisal or property valuation, title insurance, flood hazard determination, and recording fees, and are estimated to total between $735 and $1,700 on credit limits up to $500,000, and between $1,600 and $5,000 on credit limits over $500,000. If there are any unforeseen costs associated with opening a Loan Account, such as fees charged by other lenders, you must pay them. If you pay off and close your Loan Account within three years of opening it, an early payoff fee of $350 (if your limit is up to $250,000) or $1,000 (if your limit is over $250,000 but not over $500,000) will be added to your loan balance to partially reimburse the Credit Union for costs absorbed in establishing the Loan Account. The early payoff fee will be waived if the Loan Account is paid off due to the sale of your property.

There is no annual fee associated with this Loan Account.

If we make available and you use a credit card to access the Loan Account, credit card transactions conducted in foreign countries and foreign currencies will be subject to an international service assessment equal to 1% of the transaction amount.

You may request an itemization of fees. In any event, we will give you an itemization of third party fees when your loan account is opened, even though we may not pass the fees along to you initially . 

Tax Deductibility: You should consult a tax advisor regarding the deductibility of interest and charges under this program.

Variable Rate Feature: This loan account has a variable rate feature, and the ANNUAL PERCENTAGE RATE and the minimum monthly payment can change as a result. The ANNUAL PERCENTAGE RATE includes only interest. Other costs are not included. Except during any initial fixed rate period or other promotional fixed rate period, the interest rate is based on an index. The index is the highest commercial prime rate correctly published in the Wall Street Journal, Western Edition, on the 15th day of the month prior to a scheduled change date. To determine the ANNUAL PERCENTAGE RATE that will apply to your account, we add a margin to the index. The margin varies depending on the loan-to-value ratio on your property, the amount of your opening advance, and our evaluation of your credit history. Ask us for the current index rate, margins, and ANNUAL PERCENTAGE RATES. After you open an account, rate information will be provided on periodic statements that we send you.

Rate Changes:

Fixed-Rate Periods: Some applicants may qualify for and select a Loan Account that provides an introductory fixed rate period. From time to time you may also be offered other fixed rate periods on your Loan Account. If you qualify for fixed rate discount because you have established automatic loan payments from a KeyPoint checking account or direct deposit of your full net pay or benefit income, and you discontinue the direct deposit or automatic payment that qualified you for that discount, your rate can immediately increase by the amount of your discount.

Variable Rate Periods: Except during any initial fixed rate period or other promotional fixed rate period, the ANNUAL PERCENTAGE RATE can change quarterly on the first calendar day of the quarter (January 1, April 1, July 1, October 1). There are no limits on the amount of any scheduled rate changes, except the following: The rate will not decrease below 3.99% ANNUAL PERCENTAGE RATE and the rate will not increase above 16.00% ANNUAL PERCENTAGE RATE. Any introductory or other promotional fixed ANNUAL PERCENTAGE RATE that is lower than 3.99% will, at the end of the fixed rate period, adjust to the greater of 3.99% or the rate obtained by adding the index to the margin assigned to your Loan Account.

Maximum Rate and Payment Examples: If you had an outstanding balance of $10,000.00 with an initial ANNUAL PERCENTAGE RATE of either 3.99% or 8.25%, and the ANNUAL PERCENTAGE RATE increased to 16.00%, the maximum monthly interest-only payment during the draw period would be $133.33. If you had a $10,000 outstanding balance at the beginning of the repayment period, and the ANNUAL PERCENTAGE RATE was 16.00%, the maximum monthly fully amortized payment during the repayment period would be $146.87. The maximum rate and payment could first be reached at the first scheduled rate adjustment during the draw period or at any rate adjustment thereafter during the draw or repayment periods.  

Variable Rate Example: The following table shows how the ANNUAL PERCENTAGE RATE and the minimum monthly payments for a single $10,000 loan advance would have changed based on changes in the index over the last 15 years. The index values are those that would have applied to the January change for each year listed. While only one payment amount per year is shown, payments would have varied slightly during each year. The table assumes that no additional loan advances were taken and that only the minimum monthly payment was made each month. It does not necessarily indicate how the index or your payments will change in the future. These margins have been used recently:

¹ These are margins we have used recently. Your margin may be different.

² Payments shown are interest-only. Following the 15-year draw period, you would make fully amortized payments for 15 years.

³ Annual percentage rate does not equal index plus margin to reflect floor rate applicable to this program.

A copy of this disclosure is a part of the loan agreement.                     

© 2012 Greene & Allison LLP. All rights reserved. HELOC Discl. 01/12