Whether you are borrowing against the equity in your personal residence or secondary home, this information can help you decide if an Interest-Only Home Equity Line of Credit is right for you.

An Interest-Only Home Equity Line of Credit can be complicated. If you do not understand how it works, you should not sign any loan contracts or documents, and you might want to consider other types of lines of credit.

Interest-Only Home Equity Lines of Credit allow you to pay only the interest on the money you borrow for a specified period of time. For example: on an Interest-Only Home Equity Line of Credit you will be required to pay interest monthly until the end of the draw period (the period
of time during which you may obtain advances on your line of credit). Voluntary principal payments may be made at any time during the draw period; however, they are not required. If you pay only the amount due (interest), then at the end of the interest-only period, you will still owe the full amount you have drawn on your Home Equity Line of Credit. Your monthly payment will thereafter increase because, as you begin the repayment period, you must pay back the principal as well as interest.

Read your closing documents carefully to be sure you understand the product you are selecting.

Additional Information

Equity in your Property – If you make interest-only payments (and you make no voluntary principal payments), your payments are not building equity in your property. This may make it harder to refinance your Home Equity Line of Credit or to obtain funds from selling or refinancing your property.

Whitney National Bank does not have prepayment penalties in any of our Home Equity Lines of Credit. You may pay on the principal balance at any time or prepay the loan in full – all without penalty.

Your monthly payment will not include an amount to cover taxes and insurance. In some mortgages, your monthly payment includes both principal and interest and an amount to cover real estate taxes and home insurance – and your lender pays your taxes and insurance out of these funds. Monthly payments to Whitney will not include any amounts for taxes and insurance. Unless you have another mortgage on your Property where your other lender pays your taxes and insurance, you will be responsible for paying real estate taxes and insurance premiums when the bills arrive, including flood insurance, if applicable. When you are comparing mortgages, or deciding whether you can afford a mortgage, you need to consider whether or not the monthly payment includes an amount to cover estimated taxes and insurance.

Home Equity Lines of Credit have a variable rate of interest during the draw period. The rate can change monthly, depending on the value of the Index, and the minimum payment can change as a result. The maximum interest rate you can have on your Home Equity Line of Credit is 18%. The maximum rate will be reached only if the Index plus the margin that we add reaches 18%. Except for the maximum rate, there is no limit on the amount by which the rate can change during any period, and the maximum rate could be reached at the time of the first payment. Any increases in the Index will require you to pay a higher monthly interest payment.

*A line of credit is a revolving loan account that contemplates multiple borrowings against the
credit line, repayment of any portion of the amount borrowed, and re-borrowings up to the
amount of the credit limit. At the end of the draw period, the repayment period begins and credit advances are no longer permitted.

Sample Home Equity Line Payment Options Comparison:

Interest Only Versus Percentage of Balance

(the greater of 2% of loan account balance or $150)

Payment examples based on: 1) a recent APR of 8.75%, and 2) the maximum APR of 18.00% -
both examples assume that the rate does not change over the five-year draw period. Estimated payments do not include any amount for taxes and insurance.

* Payment examples assume a single $10,000 credit advance when the line is opened, and that no additional advances are made during the five-year draw period.

** Includes principal and final interest payment due at the end of the five-year draw period.

*** Assuming you make no additional principal payments during the five year draw period.