TRUTH IN LENDING, HOME EQUITY LINES OF CREDIT

• STANDARD HOME EQUITY LINE OF CREDIT TRUTH IN LENDING DISCLOSURE
• RATE ADVANTAGE HOME EQUITY LINE OF CREDIT TRUTH IN LENDING DISCLOSURE

 

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STANDARD HOME EQUITY LINE OF CREDIT TRUTH IN LENDING, EARLY FEDERAL DISCLOSURE

(Variable Rate/Draw and Repayment Period)

THIS EARLY FEDERAL DISCLOSURE CONTAINS IMPORTANT INFORMATION ABOUT THE HOME EQUITY LINE OF CREDIT YOU ARE CONSIDERING. YOU SHOULD READ IT CAREFULLY AND KEEP A COPY FOR YOUR RECORDS.

1. DEFINITIONS: In this Early Federal Disclosure, the following words have the following meanings:

• "Account" and "Home Equity Line of Credit" mean the real estate-secured line of credit account in the amount of the Credit Limit that we will establish for you pursuant to the HELOC Agreement.
• "Account Advance" means money advanced from the Account to you, any person you permit to use the Account, your authorized attorney-in-fact, or on your behalf in any form, or to any third party at your direction.
• "Account Balance" means the unpaid sum of all Account Advances, Collection-Related Charges, Fees, and accrued FINANCE CHARGES.
• "Collection-Related Charges" means: (i) collection costs, reasonable attorneys' fees, and court costs incurred by us to enforce the HELOC Agreement and/or the Deed of Trust; (ii) costs of repair, insurance premiums, and all fees, costs and other charges incurred by us to protect, retake, or repair the Security; (iii) costs of sale of the Security, such as foreclosure fees and associated third party fees; and, (iv) any property taxes advanced.
• "Fees" means any and all of the Credit Union Fees and Third Party Fees listed below other than Collection-Related Charges.
• "HELOC Agreement" means the Home Equity Line of Credit Agreement.
• "We," "us" and "our" means SCHOOLSFIRST FEDERAL CREDIT UNION.
• "You" and "your" mean all those who are or may be applicants for a Home Equity Line of Credit with us.

2. AVAILABILITY OF TERMS: All of the terms described in this Early Federal Disclosure are subject to change until your loan closes. If these terms change (other than a change in the ANNUAL PERCENTAGE RATE) and you decide, as a result, not to enter into the HELOC Agreement with us, you are entitled to a refund of any fees you paid to us or anyone else in connection with your application.
3. SECURITY INTEREST: We will take a security interest on your home (the "Security"). You could lose your home if you do not meet the obligations in your HELOC Agreement with us.
4. POSSIBLE CREDITOR ACTIONS: Under certain circumstances, we can (1) terminate your Home Equity Line of Credit, require you to pay us the Account Balance in one single payment, and charge you certain fees; (2) refuse to make additional Account Advances; (3) reduce your credit limit; and (4) as specified in the HELOC Agreement, implement certain changes in the plan. If you ask, we will give you more specific information concerning when we can take these actions.
5. MINIMUM MONTHLY PAYMENT REQUIREMENTS: A Minimum Monthly Payment is required during both the Draw Period and the Repayment Period.

(a) DRAW PERIOD: You can obtain advances of credit for 120 months (the "Draw Period"). During the Draw Period, payments will be due on or before the date shown on your billing statement. Your Minimum Monthly Payment will be equal to the amount of the accrued, unpaid FINANCE CHARGES (interest only) shown on your monthly statement, plus any amount that is past due, any amount by which your Account Balance exceeds your Credit Limit, and any late charges. The Minimum Monthly Payment during the Draw Period will not reduce the Account Balance. If the monthly FINANCE CHARGE is less than $10.00, you will not be required to make a payment for that month; however, interest will continue to accrue.

(b) REPAYMENT PERIOD: After the Draw Period ends you will no longer be able to obtain Account Advances and must repay the Account Balance over fifteen (15) years (the "Repayment Period"). The payment will be calculated based upon the amortization of the Account Balance over fifteen (15) years at the variable ANNUAL PERCENTAGE RATE provided for in the HELOC Agreement. During the Repayment Period payments will be due on or before the due date shown on your billing statement.

During the Draw Period and Repayment Period, you may of course, pay more frequently, pay more than the required Minimum Monthly Payment, or pay the Account Balance in full, and you will reduce your periodic FINANCE CHARGE by doing so. If any amount is past due, this past due amount must be paid in addition to your Minimum Monthly Payment. If any amount exceeds your Credit Limit, the amount in excess of your Credit Limit must be paid in addition to your Minimum Monthly Payment. On the Maturity Date or such earlier date on which your Home Equity Line of Credit is cancelled or terminated, the Account Balance will be due and payable in full.

6. MINIMUM PAYMENT EXAMPLE: Assume you obtain a $10,000 advance under the HELOC Agreement with an ANNUAL PERCENTAGE RATE of 4%. Assume further, for purposes of this example, that the ANNUAL PERCENTAGE RATE remains at this rate (although your ANNUAL PERCENTAGE RATE will be variable under the terms of the HELOC Agreement). Assuming you made only your Minimum Monthly Payments (on a timely basis) during the Draw Period and Repayment Period, and you did not obtain any additional Account Advances, in order to pay-off the Account Balance, you would make 120 monthly payments of $33.33 during the Draw Period and 180 monthly payments of $73.97 during the Repayment Period.
7. FEES AND CHARGES: To open and maintain an Account with us, you must pay us the following fees: ANNUAL MAINTENANCE FEE: You agree to pay a $50.00 annual maintenance fee. (This fee will be waived if you set up and maintain an automatic transfer of your Minimum Monthly Payment from your SchoolsFirst Federal Credit Union share account). You understand that this fee will be added to your Account Balance and will bear interest at the variable ANNUAL PERCENTAGE RATE provided for in the HELOC Agreement. This maintenance fee will be assessed on or about the anniversary date of loan origination.

HOME EQUITY CHECK FEE: In the event that a Home Equity Check is returned for any reason, you agree to pay a $20.00 Non-Sufficient Funds (NSF) fee. You understand that this fee will be added to your Account Balance and will bear interest at the variable ANNUAL PERCENTAGE RATE provided for in the HELOC Agreement.

TRANSACTION FEE: $0.00
ORIGINATION FEE: $0.00

If the Account Balance is paid-off and we execute a reconveyance of the Deed of Trust, we will charge you a Reconveyance Fee up to the maximum permitted under applicable law. For each Beneficiary's Demand we receive, we will charge a Beneficiary's Demand Fee of $30.00, or up to the maximum permitted under applicable law at the time the request for payoff demand is made, to furnish the information.

LATE CHARGE: If we have not received the Minimum Monthly Payment by the end of 15 calendar days after the date it is due, you agree to pay a Late Charge of U.S. $5.00 or 5.000% of the overdue payment, whichever is greater. Borrower will pay this Late Charge promptly but only once on each late payment.

8. MINIMUM DRAW REQUIREMENTS: The minimum initial Account Advance that you must draw under the HELOC Agreement at the time of origination is $0.00. Thereafter, you may request Account Advances in any amount against your available Credit Limit during the Draw Period.
9. TAX DEDUCTIBILITY: FINANCE CHARGES (interest) and the Fees on your HELOC Agreement may be tax deductible. You should consult a tax advisor regarding the deductibility of interest and fees under the HELOC Agreement.
10. RATES/COSTS: The ANNUAL PERCENTAGE RATE includes only interest and no other costs. This plan contains a variable rate feature and the ANNUAL PERCENTAGE RATE (corresponding to the periodic rate) and the amount of your payments can change as a result. The ANNUAL PERCENTAGE RATE may increase or decrease on a monthly basis during the term of the HELOC Agreement. Any such change will be based upon an increase or decrease in the Index. The Index during the Draw and Repayment Periods is: the highest published Wall Street Journal Prime Rate, rounded to the nearest 1/8th of 1%. In the event that the Prime Rate ceases to be published, changes to the ANNUAL PERCENTAGE RATE will be related to a comparable Index as permitted under the Change of Terms provisions set forth in the HELOC Agreement.

Your ANNUAL PERCENTAGE RATE is determined by adding a fixed amount (a "Margin") to the Index value as of each Adjustment Date (defined below). The initial ANNUAL PERCENTAGE RATE and the Index and Margin values in effect as of the date of the HELOC Agreement will be set forth in the HELOC Agreement. Ask us for the current Index values, Margin, ANNUAL PERCENTAGE RATE and other home equity plans we offer. After you open an Account, the ANNUAL PERCENTAGE RATE will be provided on periodic statements that we send you.

11. RATE CHANGES: The ANNUAL PERCENTAGE RATE is subject to change on the twentieth (20th) day of each month. These dates shall be known as "Adjustment Dates." The Index in effect on the last business day of the preceding month shall be used to calculate the ANNUAL PERCENTAGE RATE change effective on the Adjustment Date.

The maximum ANNUAL PERCENTAGE RATE during the term of the HELOC Agreement is 18.00%, except that the maximum may not exceed the maximum ANNUAL PERCENTAGE RATE permitted under applicable law at the time of each Adjustment Date. The minimum ANNUAL PERCENTAGE RATE during the term of the HELOC Agreement is 4.000%. Except as set forth in the HELOC Agreement, there are no limits on changes in the ANNUAL PERCENTAGE RATE during the term of the HELOC Agreement. Decreases in the ANNUAL PERCENTAGE RATE in accordance with the terms of the HELOC Agreement are mandatory. Increases in the ANNUAL PERCENTAGE RATE in accordance with the terms of the HELOC Agreement are at our discretion. Any increase or decrease in the ANNUAL PERCENTAGE RATE will result in changes in the amount of payments required to repay the Account Balance.

12. MAXIMUM RATE AND PAYMENT EXAMPLES/DRAW PERIOD: Assume: (1) an Initial ANNUAL PERCENTAGE RATE of 5%; (2) that the ANNUAL PERCENTAGE RATE reached the maximum of 18.00% and remained at the maximum rate; (3) that you had an initial Account Advance of $10,000 at the beginning of the Draw Period; and (4) no other Account Advances were taken. Assuming no over limit or past due amounts, the Minimum Monthly Payment during the Draw Period would be $150.00 and during the Repayment Period would be $161.04 The maximum ANNUAL PERCENTAGE RATE could be reached at the first Adjustment Date.

HISTORICAL EXAMPLE: The following table shows how the ANNUAL PERCENTAGE RATE and the Minimum Monthly Payments for a single $10,000 Account Advance would have changed based on changes in the Index over the past fifteen (15) years. The Index values for the Prime Rate are from the first business day of January of each year. The table assumes only an annual change in the ANNUAL PERCENTAGE RATE and Minimum Monthly Payment. As set forth above, your ANNUAL PERCENTAGE RATE is subject to change every month. Your Minimum Monthly Payments are subject to change after each Account Advance. The table assumes that no additional Account Advances were taken, that only the Minimum Monthly Payments were made, and that the ANNUAL PERCENTAGE RATE remained constant during each year. It does not necessarily indicate how the Index or your Minimum Monthly Payments will change in the future.

HISTORICAL EXAMPLE OF INDEX RATE CHANGES FOR THIS PRODUCT

PROPERTY INSURANCE: You must maintain dwelling insurance on the Security, acceptable to us and fully insuring the Security against loss or damage by fire and other standard perils. You may obtain this insurance from a person of your own choosing. If you do not get or keep this insurance, we may obtain this insurance and you agree to pay for it.

Pursuant to California Civil Code § 2955.5, we will not require you, as a condition of receiving or maintaining your Account and the HELOC Agreement (and your pledge of the Security pursuant to the HELOC Agreement), to provide fire and other standard hazard insurance coverage against risks to the improvements on the Security in an amount exceeding the replacement value of the improvements on the Security.

If the Security is now, or at some future date is determined to be, located in a flood hazard area qualifying for and having available flood insurance under the National Flood Insurance Act of 1968/National Flood Insurance Act of 1994, you must maintain flood insurance on the Security, acceptable to us and fully insuring the Security against loss by flood and other related standard perils. You may obtain this insurance from a person of your own choosing. If you do not get or keep this insurance, we may obtain this insurance and you agree to pay for it.

Any amount spent by us for insurance will be added to the Account Balance and will accrue FINANCE CHARGES. We are under no obligation to purchase any particular type or amount of coverage. Therefore, such coverage shall cover us, but might or might not protect you, your equity in the Security, or the contents of the Security, against any risk, hazard or liability and might provide greater or lesser coverage than was previously in effect. You acknowledge that the cost of the insurance coverage so obtained by us might significantly exceed the cost of insurance that you could have obtained. The proceeds of any insurance policy on the Security, whether or not required by us, shall be applied solely to repairs of the Security or repayment of the Account Balance.

 

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RATE ADVANTAGE HOME EQUITY LINE OF CREDIT TRUTH IN LENDING, EARLY FEDERAL DISCLOSURE

(Variable Rate/Draw and Repayment Period)

THIS EARLY FEDERAL DISCLOSURE CONTAINS IMPORTANT INFORMATION ABOUT THE HOME EQUITY LINE OF CREDIT YOU ARE CONSIDERING. YOU SHOULD READ IT CAREFULLY AND KEEP A COPY FOR YOUR RECORDS.

1. DEFINITIONS: In this Early Federal Disclosure, the following words have the following meanings:

• "Account" and "Home Equity Line of Credit" mean the real estate-secured line of credit account in the amount of the Credit Limit that we will establish for you pursuant to the HELOC Agreement.
• "Account Advance" means money advanced from the Account to you, any person you permit to use the Account, your authorized attorney-in-fact, or on your behalf in any form, or to any third party at your direction.
• "Account Balance" means the unpaid sum of all Account Advances, Collection-Related Charges, Fees, and accrued FINANCE CHARGES.
• "Collection-Related Charges" means: (i) collection costs, reasonable attorneys' fees, and court costs incurred by us to enforce the HELOC Agreement and/or the Deed of Trust; (ii) costs of repair, insurance premiums, and all fees, costs and other charges incurred by us to protect, retake, or repair the Security; (iii) costs of sale of the Security, such as foreclosure fees and associated third party fees; and, (iv) any property taxes advanced.
• "Fees" means any and all of the Credit Union Fees and Third Party Fees listed below other than Collection-Related Charges.
• "HELOC Agreement" means the Home Equity Line of Credit Agreement.
• "We," "us" and "our" means SCHOOLSFIRST FEDERAL CREDIT UNION.
• "You" and "your" mean all those who are or may be applicants for a Home Equity Line of Credit with us.

2. AVAILABILITY OF TERMS: All of the terms described in this Early Federal Disclosure are subject to change until your loan closes. If these terms change (other than a change in the ANNUAL PERCENTAGE RATE) and you decide, as a result, not to enter into the HELOC Agreement with us, you are entitled to a refund of any fees you paid to us or anyone else in connection with your application.
3. SECURITY INTEREST: We will take a security interest on your home (the "Security"). You could lose your home if you do not meet the obligations in your HELOC Agreement with us.
4. POSSIBLE CREDITOR ACTIONS: Under certain circumstances, we can (1) terminate your Home Equity Line of Credit, require you to pay us the Account Balance in one single payment, and charge you certain fees; (2) refuse to make additional Account Advances; (3) reduce your credit limit; and (4) as specified in the HELOC Agreement, implement certain changes in the plan. If you ask, we will give you more specific information concerning when we can take these actions.
5. MINIMUM MONTHLY PAYMENT REQUIREMENTS: A Minimum Monthly Payment is required during both the Draw Period and the Repayment Period.

(a) DRAW PERIOD: You can obtain advances of credit for 120 months (the "Draw Period"). During the Draw Period, payments will be due on or before the date shown on your billing statement. Your Minimum Monthly Payment will be equal to the amount of the accrued, unpaid FINANCE CHARGES (interest only) shown on your monthly statement, plus any amount that is past due, any amount by which your Account Balance exceeds your Credit Limit, and any late charges. The Minimum Monthly Payment during the Draw Period will not reduce the Account Balance. If the monthly FINANCE CHARGE is less than $10.00, you will not be required to make a payment for that month; however, interest will continue to accrue.

(b) REPAYMENT PERIOD: After the Draw Period ends you will no longer be able to obtain Account Advances and must repay the Account Balance over fifteen (15) years (the "Repayment Period"). The payment will be calculated based upon the amortization of the Account Balance over fifteen (15) years at the variable ANNUAL PERCENTAGE RATE provided for in the HELOC Agreement. During the Repayment Period payments will be due on or before the due date shown on your billing statement.

During the Draw Period and Repayment Period, you may of course, pay more frequently, pay more than the required Minimum Monthly Payment, or pay the Account Balance in full, and you will reduce your periodic FINANCE CHARGE by doing so. If any amount is past due, this past due amount must be paid in addition to your Minimum Monthly Payment. If any amount exceeds your Credit Limit, the amount in excess of your Credit Limit must be paid in addition to your Minimum Monthly Payment. On the Maturity Date or such earlier date on which your Home Equity Line of Credit is cancelled or terminated, the Account Balance will be due and payable in full.

6. MINIMUM PAYMENT EXAMPLE: Assume you obtain a $10,000 advance under the HELOC Agreement with an ANNUAL PERCENTAGE RATE of 5%. Assume further, for purposes of this example, that the ANNUAL PERCENTAGE RATE remains at this rate (although your ANNUAL PERCENTAGE RATE will be variable under the terms of the HELOC Agreement). Assuming you made only your Minimum Monthly Payments (on a timely basis) during the Draw Period and Repayment Period, and you did not obtain any additional Account Advances, in order to pay-off the Account Balance, you would make 120 monthly payments of $41.67 during the Draw Period and 180 monthly payments of $79.08 during the Repayment Period.
7. FEES AND CHARGES: To open and maintain an Account with us, you must pay us the following fees: ANNUAL MAINTENANCE FEE: You agree to pay a $50.00 annual maintenance fee. (This fee will be waived if you set up and maintain an automatic transfer of your Minimum Monthly Payment from your SchoolsFirst Federal Credit Union share account). You understand that this fee will be added to your Account Balance and will bear interest at the variable ANNUAL PERCENTAGE RATE provided for in the HELOC Agreement. This maintenance fee will be assessed on or about the anniversary date of loan origination.

HOME EQUITY CHECK FEE: In the event that a Home Equity Check is returned for any reason, you agree to pay a $20.00 Non-Sufficient Funds (NSF) fee. You understand that this fee will be added to your Account Balance and will bear interest at the variable ANNUAL PERCENTAGE RATE provided for in the HELOC Agreement.

TRANSACTION FEE: $0.00
ORIGINATION FEE: $0.00

If the Account Balance is paid-off and we execute a reconveyance of the Deed of Trust, we will charge you a Reconveyance Fee up to the maximum permitted under applicable law. For each Beneficiary's Demand we receive, we will charge a Beneficiary's Demand Fee of $30.00, or up to the maximum permitted under applicable law at the time the request for payoff demand is made, to furnish the information.

LATE CHARGE: If we have not received the Minimum Monthly Payment by the end of fifteen (15) calendar days after the date it is due, you agree to pay a Late Charge of U.S. $5.00 or 5.000% of the overdue payment, whichever is greater. You will pay this Late Charge promptly but only once on each late payment.

8. MINIMUM DRAW REQUIREMENTS: The minimum initial Account Advance that you must draw under the HELOC Agreement at the time of origination is $0.00. Thereafter, you may request Account Advances in any amount against your available Credit Limit during the Draw Period.
9. TAX DEDUCTIBILITY: FINANCE CHARGES (interest) and the Fees on your HELOC Agreement may be tax deductible. You should consult a tax advisor regarding the deductibility of interest and fees under the HELOC Agreement.
10. RATES/COSTS: The ANNUAL PERCENTAGE RATE includes only interest and no other costs. This plan contains a variable rate feature and the ANNUAL PERCENTAGE RATE (corresponding to the periodic rate) and the amount of your payments can change as a result. The ANNUAL PERCENTAGE RATE may increase or decrease on a monthly basis during the term of the HELOC Agreement. Any such change will be based upon an increase or decrease in the Index. The Index during the Draw and Repayment Periods is: the highest published Wall Street Journal Prime Rate, rounded to the nearest 1/8th of 1%. In the event that the Prime Rate ceases to be published, changes to the ANNUAL PERCENTAGE RATE will be related to a comparable Index as permitted under the Change of Terms provisions set forth in the HELOC Agreement.

The temporary fixed initial ANNUAL PERCENTAGE RATE is a temporarily fixed rate for a period of sixty (60) months and is calculated by adding a premium to the sum of the Index plus the Margin. The temporary fixed initial ANNUAL PERCENTAGE RATE and the Index and Margin values in effect as of the date of the HELOC Agreement will be set forth in the HELOC Agreement. Following the temporary fixed initial rate period, your ANNUAL PERCENTAGE RATE is determined by adding a fixed amount (a "Margin") to the Index value as of each Adjustment Date (defined below). The initial ANNUAL PERCENTAGE RATE and the Index and Margin values in effect as of the date of the HELOC Agreement will be set forth in the HELOC Agreement. Ask us for the current Index values, Margin, ANNUAL PERCENTAGE RATE and other home equity plans we offer. After you open an Account, the ANNUAL PERCENTAGE RATE will be provided on periodic statements that we send you.

11. RATE CHANGES: Following the temporary fixed initial rate period, the ANNUAL PERCENTAGE RATE is subject to change on the twentieth (20th) day of each month. These dates shall be known as "Adjustment Dates." The Index in effect on the last business day of the preceding month shall be used to calculate the ANNUAL PERCENTAGE RATE change effective on the Adjustment Date.

The maximum ANNUAL PERCENTAGE RATE during the term of the HELOC Agreement is 18.00%, except that the maximum may not exceed the maximum ANNUAL PERCENTAGE RATE permitted under applicable law at the time of each Adjustment Date. Following the temporary fixed initial rate period, the minimum ANNUAL PERCENTAGE RATE during the term of the HELOC Agreement is 4.000%. Except as set forth in the HELOC Agreement, there are no limits on changes in the ANNUAL PERCENTAGE RATE during the term of the HELOC Agreement. Decreases in the ANNUAL PERCENTAGE RATE in accordance with the terms of the HELOC Agreement are mandatory. Increases in the ANNUAL PERCENTAGE RATE in accordance with the terms of the HELOC Agreement are at our discretion. Any increase or decrease in the ANNUAL PERCENTAGE RATE will result in changes in the amount of payments required to repay the Account Balance.

12. MAXIMUM RATE AND PAYMENT EXAMPLES/DRAW PERIOD: Assume: (1) an Initial ANNUAL PERCENTAGE RATE of 5%; (2) that the ANNUAL PERCENTAGE RATE reached the maximum of 18.00% and remained at the maximum rate; (3) that you had an initial Account Advance of $10,000 at the beginning of the Draw Period; and (4) no other Account Advances were taken. Assuming no over limit or past due amounts, the Minimum Monthly Payment during the Draw Period would be $150.00 and during the Repayment Period would be $161.04. The maximum ANNUAL PERCENTAGE RATE could be reached at the first Adjustment Date.

HISTORICAL EXAMPLE: The following table shows how the ANNUAL PERCENTAGE RATE and the Minimum Monthly Payments for a single $10,000 Account Advance would have changed based on changes in the Index over the past fifteen (15) years. The Index values for the Prime Rate are from the first Business day of January of each year. The table assumes only an annual change in the ANNUAL PERCENTAGE RATE and Minimum Monthly Payment. As set forth above, your ANNUAL PERCENTAGE RATE is subject to change every month. Your Minimum Monthly Payments are subject to change after each Account Advance. The table assumes that no additional Account Advances were taken, that only the Minimum Monthly Payments were made, and that the ANNUAL PERCENTAGE RATE remained constant during each year. It does not necessarily indicate how the Index or your Minimum Monthly Payments will change in the future.

HISTORICAL EXAMPLE OF INDEX RATE CHANGES FOR THIS PRODUCT

PROPERTY INSURANCE: You must maintain dwelling insurance on the Security, acceptable to us and fully insuring the Security against loss or damage by fire and other standard perils. You may obtain this insurance from a person of your own choosing. If you do not get or keep this insurance, we may obtain this insurance and you agree to pay for it.

Pursuant to California Civil Code § 2955.5, we will not require you, as a condition of receiving or maintaining your Account and the HELOC Agreement (and your pledge of the Security pursuant to the HELOC Agreement), to provide fire and other standard hazard insurance coverage against risks to the improvements on the Security in an amount exceeding the replacement value of the improvements on the Security.

If the Security is now, or at some future date is determined to be, located in a flood hazard area qualifying for and having available flood insurance under the National Flood Insurance Act of 1968/National Flood Insurance Act of 1994, you must maintain flood insurance on the Security, acceptable to us and fully insuring the Security against loss by flood and other related standard perils. You may obtain this insurance from a person of your own choosing. If you do not get or keep this insurance, we may obtain this insurance and you agree to pay for it.

Any amount spent by us for insurance will be added to the Account Balance and will accrue FINANCE CHARGES. We are under no obligation to purchase any particular type or amount of coverage. Therefore, such coverage shall cover us, but might or might not protect you, your equity in the Security, or the contents of the Security, against any risk, hazard or liability and might provide greater or lesser coverage than was previously in effect. You acknowledge that the cost of the insurance coverage so obtained by us might significantly exceed the cost of insurance that you could have obtained. The proceeds of any insurance policy on the Security, whether or not required by us, shall be applied solely to repairs of the Security or repayment of the Account Balance.