Home Equity
Second Home
- Variable Rate that can go as low as 5.00%
- Lines available from $20,000 - $200,000
- 15 years of interest-only payments
New to Direct?
Start your application hereYour Home, Your Equity, Your Financial Freedom
- Variable + Fixed Rate Flexibility: Enjoy the option to convert all or a portion of your home equity line to a fixed-rate loan.2
- 70% Loan-To-Value: Borrow up to 70% of the equity in your second home.3
- $0 Origination Fee: We believe in transparency – that's why we charge no origination, application, annual, or recording fees.4
- Low Floor Rate: Market-leading floor rate at just 5.00% APR.
Key Features
Fixed Rate Options
Your Money, Your Way
Fast Closing Turnaround
Interest-Only Payments
Home Equity Line of Credit (HELOC) Rates
The rate listed is the Annual Percentage Rate (APR) which is variable and is equal to the Wall Street Journal Prime Rate (the Index), subject to a minimum rate of 5.00% and a maximum rate of 18.00%, or the maximum rate permitted by law, whichever is less. Rate can change monthly. All HELOC’s have a 15 Year Draw period and a 15 Year Repayment period. For this rate, the Line must be secured by a 1-4 Family Residential Home or Condo. Second Homes only (No income producing properties). Maximum LTV is 70%. Maximum Line amount is $200,000. Prime rate as of 12/19/2024 is 7.50%. All rates subject to change without notice. Property insurance required. Subject to Credit Approval, other conditions may apply.
The Fixed Rate Loan Option is available during the draw and repayment periods. The minimum conversion amount is $5,000. Options are available for fixed rate terms of 5, 10, 15, or 20 Years. No Fixed Rate loan can extend past the maturity date of the mortgage that secures your Home Equity Line of Credit Account. Maximum of three (3) Fixed Rate loans. Contact us for more information.
Equity is determined based on the current year assessed value. An appraisal will be required if the requested amount exceeds 70% LTV. The appraisal is paid for by the applicant. Appraisal fees can range from $500 to $1,100 (or greater depending upon the property type).
Homes in a trust will require a trust review (to determine it meets our required guidelines). Any fees incurred for the trust will be paid by the applicant.
New to Direct?
Start your application hereInterested in accessing the equity in your home?
Glossary
The Annual Percentage Rate (APR) is the yearly interest rate that borrowers are charged on a sum of money. It is expressed as a percentage and represents the actual cost of funds over the term of a loan. This rate includes any fees or additional costs associated with the transaction but does not consider compounding. The APR is a helpful measure for consumers to compare among lenders as it provides a clear and standardized number.
An estimate of a property’s worth by a licensed appraiser.
The maximum rate for a variable rate loan. At Direct Federal, the maximum rate for a Home Equity Line of Credit is 18% APR. Since our Home Equity Line of Credit tied to the The Wall Street Journal Prime Rate as posted on the last business day of the previous month, even if that rate exceeds 18% APR, your rate will never exceed 18% APR.
Combined Loan-To-Value (CLTV) Ratio is an extension of Loan-To-Value (LTV) Ratio for Home Equity considerations by adding in the the desired Home Equity Line Credit to your current mortgage balance.
(Current first mortgage loan balance + Desired Home Equity Line limit) ÷ Current appraised value = CLTV
Example: You currently have a loan balance of $100,000, and you want to take out a $25,000 home equity line of credit. Your home currently appraises for $250,000. So your combined loan-to-value equation would look like this:
$125,000 ÷ $250,000 = .50
Convert .50 to a percentage, and that gives you a combined loan-to-value ratio of 50%.
Primary Residences:
Direct will lend up to 80% of Combined Loan-to-Value.
Second Homes and Investment Properties
Direct will lend up to 70% of Combined Loan-to-Value.
The Draw Period is the period of time you can access funds from your Home Equity Line. Direct offers a 15-year draw period with interest-only monthly payments.
The difference between the market value of a property and the owner's outstanding mortgage balances.
Primary Residences: Direct will lend up to 80% of Combined Loan-to-Value.
Second Homes and Investment Properties: Direct will lend up to 70% of Combined Loan-to-Value.
Interest rates on fixed rate loans stay the same for the loan's entire repayment term. This means the cost of borrowing money stays constant throughout the life of the loan and won't change with fluctuations in the market.
For variable rate loans, like a Home Equity Line of Credit, a floor rate is a rate the lender sets as the lowest rate in your loan agreement. Currently, Direct Federal's Home Equity Line of Credit's floor rate is:
Primary Residences: 3.00% APR
Second Homes and Investment Properties: 5.00% APR
Measure of interest rates generally that reflects trends in the overall economy. Different lenders use different indexes in their loans. Direct Federal uses The Wall Street Journal Prime Rate as posted on the last business day of the previous month.
Your loan-to-value ratio (LTV) expresses how much you owe on your current first mortgage. Basic loan-to-value ratio formula:
Current first mortgage loan balance ÷ Current appraised value = LTV
Example: You currently have a loan balance of $100,000. Your home currently appraises for $250,000. So your loan-to-value equation would look like this:
$100,000 ÷ $250,000 = .40
Convert .40 to a percentage for a loan-to-value ratio of 40%.
The Margin is the percentage that a lender adds to their index.
Primary Residences: Direct Federal calculates Home Equity Line rates using The Wall Street Journal Prime Rate as posted on the last business day of the previous month (the index) minus 0.50% (the margin).
Second Homes: Direct Federal calculates Home Equity Line rates using The Wall Street Journal Prime Rate as posted on the last business day of the previous month (the index) + 0.00% (the margin).
Investment Properties: Direct Federal calculates Home Equity Line rates using The Wall Street Journal Prime Rate as posted on the last business day of the previous month (the index) + 0.75% (the margin).
The price of a property when placed on the housing market. It is ultimately determined by what a buyer is willing to pay and what a seller is willing to sell for the property. Supply and demand are big factors.
Direct Federal is a not-for-profit, meaning that earnings are invested right back into the credit union. And that means Direct Federal can offer lower loan rates and higher deposit rates that you simply won't see anywhere else.
At the end of your Draw Period, your line will enter the Repayment Period. The Repayment Period is 15 years and is the time during which you make monthly principal and interest payments to gradually pay off your balance in full. The rate remains variable based on your Home Equity agreement.
A yearly estimation of your home’s worth, determined by your tax district’s municipal property assessor. It is a value assigned to a home in order to calculate its property taxes.
The term is the Draw Period + Repayment Period. Direct offers a 30 year term with a 15-year draw period with interest-only monthly payments. At the end of your 15-Year Draw Period, you will enter the Repayment Period. The Repayment Period is also 15 years and is the time during which you make monthly principal and interest payments to gradually pay off your balance in full.
A variable rate loan has an interest rate that adjusts over time in response to changes in the economy. Different lenders use different indexes in their loans. Direct Federal uses The Wall Street Journal Prime Rate as posted on the last business day of the previous month.
Frequently Asked Questions
Yes, Direct Federal will allow properties that are placed in acceptable trusts. The trust must be reviewed by our Attorney and must meet all of our guidelines and requirements for the transaction to move forward. The applicant will need to provide a full copy of the Trust agreement for review. The applicant must be the trustee or one of the co-trustees. All trustees must be 18 years of age or older. Additionally, the trustee must be authorized to borrow money and encumber real estate.
There are no closing costs.
Only new HELOCs are eligible for the introductory rate. Increases/refinances of an existing HELOC at Direct Federal do not qualify.
Yes. In the application, please select "Refinance Home Loan" as the "Loan Purpose".
Prepayment is allowed at any time without penalty. If you pay-off the balance and decide to close the line within the first two years, you will be charged a $395 Early Termination Fee.
Direct Federal lends on properties located in the following locations:
Massachusetts Counties: Norfolk, Middlesex, Suffolk, Plymouth, Essex, Bristol, Worcester, and Barnstable
Rhode Island Counties: All Counties in Rhode Island
New Hampshire Counties: Rockingham, Hillsborough, and Cheshire
If you are an existing member, the easiest way to check the status of an application is through the Application Center within Digital Banking.
If you are not a member, please visit our Application Status Center.
You can request a Home Equity Line of Credit and Credit Card increase through Online Banking.
Depending on the assessed value of your home, and the amount of equity you have in it, you may be eligible to refinance/increase your existing Direct Federal Home Equity Line. Home Equity Line Refinances/Increases have a $295 fee.
Click here to apply to refinance/increase your existing Home Equity Line >
We offer a variety of options to pay a Direct Federal Loan or Line of Credit.
This feature is for existing Home Equity Line of Credit (HELOC) only. You cannot get a Fixed-Rate Option without first having a Home Equity Line of Credit. However, a HELOC can be converted to a Fixed Rate Carve Out during the initial HELOC closing.
The HELOC limit will be reduced by the amount of the fixed rate loan, but once it is paid off, the limit will replenish. Terms available: 5, 10, 15, and 20 years. There are no fees associated with a Home Equity Fixed Rate Carve Out.
Maximum number of Fixed-Rate Carve Outs: 3
We do not pull credit for carve outs.
It takes about five minutes to apply and you will have an answer within one business day.
The Home Equity grace period is 10 days.
The amount you can borrow depends on the property type and the equity you have in your home.
Primary Residences: Up to 80% Combined Loan-To-Value (CLTV). Any amount between $20,000 and $500,000.
Second Home and Investment Properties: Up to 70% Combined Loan-To-Value (CLTV). Any amount between $20,000 and $200,000.
With Direct Federal, you can open a Home Equity Loan or Line for:
Primary Residences: Any amount between $20,000 and $500,000.
Second Homes and Investment Properties: Any amount between $20,000 and $200,000.
Depending on the assessed value of your home, and the amount of equity you have in it, you may be eligible to refinance/increase your existing Direct Federal Home Equity Line. You will need to submit a HELOC application and select "Home Equity Increase (Refinance)" as the purpose. Home Equity Line Refinances/Increases have a $295 fee.
Click here to apply to refinance/increase your existing Home Equity Line >
Requested Lines $400,000 and above require an appraisal. Also, if you believe your home value is higher than our assessed value, an appraisal may be required in order for us to approve the amount requested.
Appraisal cost estimates:
Single-family unit - Approximately $500
Multi-unit -Approximately $650.00
Required documentation will include but is not limited to: an insurance binder or insurance declaration page, income verification, mortgage statement, and valid license or identification.
There are no application fees, no closing costs, and no annual fees associated with a Direct Federal Home Equity Loan or Line. If the line is closed within the first two years of being opened an early termination fee of $395 would be applied.
Requested Lines $400,000 and above require an appraisal. Also, if you believe your home value is higher than our assessed value, an appraisal may be required in order for us to approve the amount requested.
Appraisal cost estimates:
Single-family unit - Approximately $500
Multi-unit -Approximately $650.00
The Draw Period is the period of time you can access funds from your Home Equity Line. Direct offers a 15-year draw period with interest-only monthly payment options.
$395 if the line is closed during the first two years.
$0 unless property is in a trust and/or there are unrecorded discharges that need to be recorded.
At the end of your 15-Year Draw Period, you will enter the Repayment Period. The Repayment Period is 15 years of principal and interest. The rate remains variable based on your Home Equity agreement.
With Direct Federal, you can open a Home Equity Loan or Line for:
Primary Residences: Any amount between $20,000 and $500,000.
Second Homes and Investment Properties: Any amount between $20,000 and $200,000.
Direct Federal lends on properties located in the following locations:
Massachusetts Counties: Norfolk, Middlesex, Suffolk, Plymouth, Essex, Bristol, Worcester, and Barnstable
Rhode Island Counties: All Counties in Rhode Island
New Hampshire Counties: Rockingham, Hillsborough, and Cheshire
HELOC closings take place at our Branch located in Needham, MA.
Yes, you will need to submit a HELOC application and select "Home Equity Increase (Refinance)" as the purpose.
Home Equity Line Refinances/Increases have a $295 fee.
Click here to apply to refinance/increase your existing Home Equity Line >
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