Home equity loans (HEL) and lines of credit (HELOC) are loans in which the borrower uses the equity in the home as collateral. They are usually referred to as “second mortgages” because they are secured against the value of the property, just like regular mortgages. Second mortgages can be useful to help finance major expenses, such as home repairs, medical bills or college education.
If you decide to get a second mortgage, you should understand that you will not only have to fill out the paperwork required by your financial institution and meet their requirements, you will also have to fill out paperwork and gather materials for the co-op. The co-op must protect its interests and agree to the second mortgage as well.
You must therefore contact our transfer agent as soon as you start thinking about getting such a loan, and you will be sent guidelines listing the requirements. Among these are: maximum financing allowed (80 percent of the apartment’s appraised value, minus liens against the property), copy of loan commitment letter, proof of current debt service, proof of current income, financial statement, and credit release authorization. All obligations to the co-op must be current. Refinancing application fees in the amount of $250 payable to the management company and $75 payable to Nagle Apartments Corp. must be included with your application. The Board may also want to meet with you after all documentation has been provided. (See also Mortgage Loan Refinancing.)