Home Equity Lines of Credit
Do It All — Increase Your Home’s Value, Save Thousands, Improve Your Life
We offer homeowners great lending options with our home equity lines of credit. Perhaps the equity in your home can be used to pay off other debt, make a large purchase or go on vacation. It’s your choice, and we offer a variety of terms and conditions for home equity lines of credit. Just contact us and we can help you get the process started!
Your home’s equity has long been among the smartest, most affordable ways to borrow; with no closing costs and rate lock options, there's no better time to apply!
Using your home's equity wisely could actually help increase your property value, save you thousands in interest payments, even set you on a path toward opportunities for future success. Learn how unlocking your home’s affordable and flexible equity can help with your goals:
- Consolidate debt
- Remodel your home
- Make home repairs
- Pay for college
- Buy a car
- Purchase a recreational vehicle (boat, motorcycle, ATV)
- Go on vacation
Boost Your Home’s Property Value Through Home Improvements
With a line of credit, you can draw on your home’s existing value at low rates to reinvest directly back into your home and potentially increase your property’s curb appeal and overall home value at the time of sale. Plus, the interest you pay may be tax deductible, too.*
Home improvement projects like these may potentially increase your home’s value:
- Kitchen improvements
- Convert an attic into a bedroom
- Add an additional bathroom
- Curb appeal projects -- new siding, new garage door, new front door, replacement windows, landscaping
- Convert basement to family recreational area
- Increase/add storage space
- Add square footage
- Miscellaneous improvements - security system, luxury appliances, home theater or spa features
Please note: Not all home improvement projects increase your home’s value. Some simply add to your enjoyment and comfort but not necessarily property value. You’ll want to research projects that best balance personal satisfaction with potential value.
Improve Your Financial Picture Through College Tuition
Whether you’re planning ahead for your child’s college education or furthering your own education, a home equity line of credit may be the most affordable option to pay tuition expenses. The addition of a bachelor’s or master’s degree could significantly improve your financial outlook through increased opportunities for a promotion, an exciting new career, or a higher salary and better benefits. Plus, the interest you pay may be tax deductible, too.*
Is a HELOC Right For You?
Call 1.800.205.3464 or visit a banking center to speak with a home equity expert and discover if an affordable and flexible HELOC is right for you.
* Consult your tax adviser regarding the deductibility of interest. By playing videos on this page, you will be shown content embedded from youtube.com, whose privacy and security policies differ from our site. First Merchants is not responsible for and does not endorse, guarantee, or monitor content, availability, viewpoints, products or services that are offered on other websites. First Merchants is not liable for any failure of products or services advertised on the linked web sites; youtube.com may provide less security than firstmerchants.com.
What is a Home Equity Line of Credit (HELOC)?
A HELOC is a credit line that is directly tied to your home’s equity, which is the portion of your home you own based on payments to your mortgage principal. A HELOC provides ongoing access to those funds, meaning you can use it all at once or in smaller increments over time. Monthly payments are based only on the portion of the line of credit you actually use. Plus, the interest you pay may be tax deductible (consult your tax adviser).
What do I need to know about a HELOC?
Here are some basic things to consider when evaluating if a HELOC is right for you:
- You must have lived in your home long enough to build equity.
- HELOCs are generally capped at 85 percent of your home’s maximum value.
- Your approval and rates are subject to income level, job security, credit history and home value.
- You will only have to make payments based on funds you use, not the full amount available.
- Your loan-to-value (LTV) ratio is a risk assessment calculation for home equity loans. The higher your LTV, the riskier your loan, which may lead to higher interest rates or loan insurance.
- Remember: In the event of a default, your home could become collateral in paying off the loan.
What's the difference between a Home Equity Loan and a Home Equity Line of Credit (HELOC)?
This can be confusing to most because both Home Equity Loans and Home Equity Lines of Credit share some similarities, such as:
- Both loans are secured by the equity the borrower owns in his/her home.
- Both loans may be referred to as a second mortgage.
- Both loans’ interest may be tax-deductible (consult your tax adviser).
Home Equity Loan
- A fixed amount of money based on your home’s equity over a fixed amount of time.
- A fixed rate of interest, typically.
- Single lump-sum dispersal with no option for the borrower to obtain additional funds.
Home Equity Line of Credit
- A revolving credit limit based on your home’s equity.
- The option to draw funds at any time, and multiple times, over a predefined time period.
- The ability to draw money as he/she needs it, in any increments.
- Funds that are instantly available for use again, as soon as the principal is repaid.
- A variable rate of interest that may fluctuate over the life of the loan.
What are approved uses of a Home Equity Loan or Home Equity Line of Credit (HELOC)?
In short, a Home Equity Loan or Home Equity Line of Credit are both very flexible and may be used for most any occasion, including:
- Home improvements (large and small)
- Debt consolidation
- College tuition and expenses
- New automobile
- Automobile refinance
- Recreational vehicles (boats, motorcycles, ATVs)
- Unexpected expenses - medical bills, new furnace, etc.
It's also worth noting that the interest you pay on a Home Equity Loan or Home Equity Line of Credit may be tax deductible (consult your tax adviser).
What does “loan to value” ratio mean, and how does it affect my Home Equity Loan or Home Equity Line of Credit (HELOC) rates?
Loan to value (LTV) is a ratio drawn by comparing the amount of money a homeowner owes on his/her first mortgage versus the home’s current appraised value. Borrowers with higher LTVs usually pay a bit higher rates of interest because they are generally seen as a higher risk than those with comparatively lower LTVs.
LTV is typically calculated as:
LTV = Mortgage Amount / Appraised Property Value
How can I access my Home Equity Line of Credit funds?
There are multiple ways in which bank customers may access their Home Equity Line of Credit funds.
- Equity Access Card - Funds may be accessed via debit card transaction, using the Equity Access card associated with your HELOC.
- Online - Simply log in to your online banking account and easily transfer money from your Home Equity Line of Credit directly into your checking or savings account.
- Phone - Customers may call the bank to request that available funds be transferred into your checking or savings account.
How many times may I access my Home Equity Line of Credit funds?
In short, customers have unlimited access up to their approved credit limit.