Adoption Support at Forever Parents

Financing an Adoption

Home equity loans for adoptions
Bob Tedeschi, New York Times

For adoptive parents, bringing a new baby into the home can be costly. One national bank has begun helping such families more easily afford the financial burdens of adoption by tapping into their home equity.

Chase, a division of JPMorgan Chase & Co., last month introduced New Additions, a program that offers adoptive parents a discounted home-equity loan. Adoption advocates say it is the first service of its kind and will give the 125,000 families who adopt children each year in the United States significantly more financial flexibility.

“For families who are spending $20,000 or $30,000 to adopt internationally, it can really help,” said Rita Soronen, executive director of the Dave Thomas Foundation for Adoption in Dublin, Ohio. “It’s very significant.”

The Chase program works like other home-equity loans, in that borrowers take out a line of credit against the equity in their homes, borrowing money and paying it back as they would a credit card.

As they have with everything else in the mortgage market in recent months, banks are making home-equity loans much more cautiously.

Chase’s New Additions product is no exception. Only those with more than 10 percent equity in their homes can qualify, and applicants must also have credit scores above the subprime level, which is typically in the low-to-mid-600 range. The maximum amount of the credit line varies with applicants’ credit histories and the amount of equity they have in their homes.

The initial interest rate varies according to a number of factors, including the applicant’s credit history. Once the loan is made, the interest rate fluctuates according to the prime interest rate, which is the rate banks offer their best customers.

Whatever interest rate an applicant qualifies for, Chase discounts that rate by a full percentage point for New Additions customers for the first six months.

Earlier this month, for instance, a borrower in Rye, N.Y., with excellent credit and 50 percent equity in a $400,000 home could qualify for a line of credit of up to $160,000 at an interest rate of 7.25 percent. The New Additions discounted introductory rate would be 6.25 percent.

Mary Jane Rogers, a Chase spokeswoman, said the company hopes to add other benefits to the program in the coming months, like discounts on travel and international phone expenses. International adoptions can cost up to $40,000, or $10,000 more than the typical domestic adoption, partly because of greater travel and communication expenses.

More information is available online at www.chase.com/newadditions.

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