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Understanding the basics of a Home Equity Line of Credit (HELOC) and a Fixed Rate Home Equity Loan can give you confidence in choosing the one that's right for you. We'll explain the differences and benefits of each option.
For details about home equity rates and other information, view important disclosures.
A HELOC uses your home as collateral for a line of credit that you can access as needed. You'll be approved for a specific amount to draw from multiple times, up to your available credit limit.
The HELOC includes 2 phases:
Because a HELOC is flexible and usually has a higher limit, it's generally used to pay for large items like tuition or home improvements rather than day-to-day expenses. Some homeowners also use a HELOC to consolidate higher-interest-rate debt.
A HELOC may be the right choice if you:
A Fixed Rate Home Equity Loan provides a set amount of money that you repay in equal monthly principal and interest (P&I) payments over a fixed time period.
This loan could be a good fit if you prefer consistent monthly payments for a longer amount of time, or if you need a certain amount for a specific purpose like a new kitchen or home addition.
A Fixed Rate Home Equity Loan may be the right choice if you:
If you sell your home, you'll be required to pay off the full amount of your HELOC or Fixed Rate Home Equity Loan immediately. Keep in mind that if you pay in full and close the line of credit within 36 months, you may also have to pay additional charges. If you're likely to sell your home in the near future, you may want to consider a loan instead.
Terms, conditions and fees for accounts, programs, products and services are subject to change.
Home equity lines and loans are not offered for collateral properties located in Alaska. A home equity line or loan is available for single family residential properties (including co-ops in New York, Illinois, District of Columbia, New Jersey and Maryland). Home equity lines are also available for 2-4 family homes that are primary residences (excluding Texas). Home equity loans are also available for 2-family homes that are primary residences (excluding Texas). In Texas, home equity lines and loans are only available on collateral properties that are single family, primary residences. Home equity loans are not available in 1st lien position if the collateral property is located in New York. Home equity lines and loans are not available for mobile homes in any state. Certain limitations apply. Lines of credit and loans are subject to credit approval. Rates are subject to change without notice. All rates are current as of 07/22/2017.
For Home Equity Lines of Credit: Variable Annual Percentage Rate (APR) can be as low as Prime plus 0.84% (currently 5.09% variable APR) and as high as Prime plus 3.74% (currently 7.99% variable APR). To qualify for the lowest rate, customers must meet relationship balance requirements (as of the closing date); have excellent credit; use Citibank Auto Deduct (an automated monthly debit from a Citibank deposit account) for repayment; meet certain loan-to-value and lien position requirements; take an initial draw of at least $25,000 at closing; and have a line amount of at least $100,000. Rates will vary depending on the state where the collateral property is located. Additional rate discounts may apply. The variable APR is indexed to the Prime Rate as published in the "Money Rates" section of The Wall Street Journal. Maximum APR is 18%. Annual fee: $50 during the draw period (not applicable if collateral property is located in Texas). Customers who elect to pay closing costs will receive an additional rate reduction (not applicable if the collateral property is located in Texas). Closing costs can range from approximately $672 to $18,217, except in New York where they can range from approximately $716 to $24,527. Closing costs may vary based upon the line amount, property location and title insurance required. An Early Closure Release Fee may be charged to recover all costs incurred for originating your loan and may apply if you close your account within 36 months (not applicable if collateral property is located in Texas). Property insurance and the fee to release an existing mortgage may be required. Applicable for loan sizes up to $1 million. No 3rd lien positions. Home Equity Lines of Credit are available to U.S. residents only.
For lines with a 5-year draw period, your monthly minimum payments during the draw period can be as low as "interest-only". If you choose to pay only the amount of interest due, then at the end of the interest-only period you will still owe the original amount you borrowed and your monthly payments will increase because you must pay back the principal as well as interest. Your payment could increase even more if your variable rate increases. Home Equity Lines of Credit with a 5-year draw period require the borrower(s) to have $200,000 or more in personal assets with Citi, or $1,000,000 or more in combined personal assets with Citi and other financial institutions. Personal assets include assets such as deposit, checking, savings, money market, investment, Certificates of Deposit, stocks and bonds, retirement, mutual fund, annuities and trust accounts. Citibank offers Home Equity Lines of Credit with 5-year draw and 10-year draw periods. Home Equity Lines of Credit with a 5-year draw period are also available in combination with a Citi mortgage. Please speak to a personal banker for more details.
For Fixed Rate Home Equity Loans: Your Annual Percentage Rate (APR) may be as low as 6.24% APR (as low as 6.49% for New York properties) or as high as 7.99% APR (as high as 8.24% for New York properties). To qualify for the lowest rate, customers must meet loan amount and term requirements, use Citibank Auto Deduct (an automated monthly debit from a Citibank deposit account) for repayment and have excellent credit history. If you borrow $50,000 for 30 years at 7.49% APR, assuming no down payment, you will make 360 payments of approximately $349.26. An Early Closure Release Fee may be charged to recover all costs incurred for originating your loan if you close your account within 36 months (not applicable if the collateral property is located in Texas). Property insurance and the fee to release an existing mortgage may be required.