Feb. 20, 2020

This paid piece is sponsored by MetaBank.

Thinking of making some home improvements? Or do you need to tackle some other expenses? It’s worth looking at how you can put your home to work for you.

If you’ve owned your home for even a relatively short time, you’ve likely built up equity that can be used to finance other expenses for your household.

“Housing prices have been rising, and in many cases that does create more equity in homes for people to use,” said Natalie Story, branch coordinator at MetaBank.

It’s quicker, easier and more flexible to use the equity in your home than you might think. Here’s a look at your options.

Home equity line of credit

A home equity line of credit is just that – a line of credit.

“It’s considered open-ended, so you can borrow on it, you can pay it down, readvance on it and continue to do that up to your credit limit,” said Nicole Harding, MetaBank branch manager.

“Our home equity lines of credit are set up for five years. Because it is a line of credit, the borrower has the ability to draw and pay down over the five-year period.”

There are options for fixed and variable interest rates with a home equity line of credit.

Home equity loan

A home equity loan is a closed-end loan. You receive a set loan amount at a set term, paid off at the end of that term, similar to a vehicle loan.

“It’s not open to draw on and continue to readvance. It will be paid off at maturity, and with those we can go up to 20 years,” Harding said. “The term length is flexible, from a couple years up to 20 years.”

Both home equity financing options “are very inexpensive, with low fees to set up,” she added.

Potential uses

Homeowners use home equity financing for a broad range of expenses, but the most common is for home renovations.

“I see quite a few circumstances where people are making improvements to their homes,” Harding said. “It’s anything from landscaping to new windows to finishing a basement, even just updating bathrooms or kitchens.”

Others use them for big-ticket expenses.

“If they want to use it for vacation, they sure can. If they want to buy a car, they can,” Harding said. “It’s their equity. They can use it for whatever purpose they want.”

Weighing the options

Wondering if a home equity loan or a line of credit is the better fit for you? Meta’s experts can help you decide.

“We base a lot on the customer’s personality,” Story said. “If it gives them peace of mind to know they have a fixed payment and at the end of five years, for example, it’s paid off, a home equity loan might be the best fit.”

Sometimes a line of credit is the better option if a home-improvement project involves supplies coming that will have accumulating expenses over a period of time rather than all at once. There’s an option to pay off and close the line of credit before the duration is over if customers prefer.

“All fees are up front, and there are no prepayment penalty fees,” Harding said. “So they can leave it open at zero and not pay any fees, or just choose to close it.”

If a customer is using home equity to consolidate other debt, “we lean toward a home equity loan, so it’s being paid down,” she added.

How it works

Once a customer is ready to start home equity financing, there’s an application process that “is fairly quick, easy and affordable,” Story said.

Meta will check your credit report, gather information on your income and the value of your home compared with what’s owed on your mortgage, and show you the lending options.

“It doesn’t take long,” Story said. “With a home equity line of credit, I like to say about two weeks, and a loan is a little longer because of timing guidelines and regulations that need to be followed. But you can get one done in less than a month.”

Thinking of home improvements this year? Head out to the Sioux Empire Home Show Friday through Sunday at the Sioux Falls Convention Center. Stop by Meta’s booth to meet the experts, and learn more about your options for financing — plus play games and win some great prizes.

Interested in learning more any time? Reach out to any MetaBank location, and specialists there will get you started.