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Smart Home Refi

Refinance Today and Put Cash in Your Pocket

If you currently owe less than $150,000 on your current home, our Smart Home Refi may be the affordable and sensible alternative to refinance your home to a new, lower interest rate while providing access to your home’s valuable equity to put cash directly in your pocket. ATTENTION: While the Smart Home Refi offers a much lower closing cost than a conventional mortgage, the rate is higher and could therefore affect your savings. If you are interested in applying for a conventional mortgage please see the Mortgage Refinancing tab above and complete your online application there.         

Smart Home Refi Is the Affordable Alternative

For a limited time, our Smart Home Refi is being offered with a flat, one-time $199* closing fee, making it the affordable alternative to traditional home mortgage refinancing. You could potentially save hundreds, even thousands, of dollars in loan closing fees alone.

Get started with your application online or call 1.800.205.3464.


Smart Home Refi Is the Sensible Alternative

Our Smart Home Refi is also the sensible alternative by providing qualified homeowners unparalleled affordability, flexibility, and cash access to their home’s equity — all from a single, convenient borrowing solution. Just see for yourself.

  • Flat $199* Closing Costs – No smoke and mirrors and no hidden costs. Just $199*. That’s it! Potentially saving you a bundle in closing costs over a traditional home mortgage refinance.
  • Cash-out Option – Convert your home’s equity directly into cash at the same low annual percentage rate. Use it toward home improvements, debt consolidation, unexpected expenses, getaway vacation, new boat/RV, college tuition, or anything else.
  • Lower Interest Payments – Potentially save hundreds or even thousands of dollars in interest payments over the life your loan depending on your home’s current annual percentage rate and term.
  • Fixed Rate/Flexible Terms – Lock into a low, fixed annual percentage rate. We offer a variety of terms to fit your financial needs. Reach out to your local banker to determine what works best for you.
  • Save Money/Pay Off Faster – Refinancing an existing higher rate home mortgage is a smart way to potentially pay off your mortgage even faster -OR- possibly lower your monthly payments.
  • No PMI – No Private Mortgage Insurance is required for this loan to keep monthly payments even lower.
  • Auto pay discount – Save an additional .25% off your annual percentage rate with auto pay from your First Merchants Bank checking account.

Get started with your application online or call 1.800.205.3464.

Is This the Right Alternative for You?

Get started with your application online or consult one of our trusted lending experts today to discuss our Smart Home Refi or other smart borrowing solutions. Call 1.800.205.3464, visit one of our banking centers, or email us for a free loan evaluation and consultation.


*Rates, term and conditions effective as of May 1, 2020 are for sample purposes only and subject to change. A sample APR of 4.65%, based on a $50,000 loan with a term of 15 years and not including taxes and insurance, would result in 180 monthly payments of $7.73 per $1,000 borrowed. Your payment and rate may vary based on term selected and credit qualifications. APR also reflects .25% discount for automatic payments from a First Merchants Bank checking account. Proof of homeowners insurance required. Maximum LTV is 80%. First lien position loans only. Other restrictions may apply, see bank for details.


What is a home equity line of credit and how does it work?
  • The definition of a home equity line of credit, also known as a HELOC, is a loan that allows you to borrow against the equity of your home. A HELOC provides flexibility, because unlike borrowing and paying interest on one large lump sum, you decide how much you need and pay interest only on what you use. A home equity line of credit typically offers a lower interest rate than other loan products.

What is a home equity loan and how does it work?
  • A home equity loan is defined as a specific one-time lump sum loan with fixed monthly payments. Home equity loans are commonly used by borrowers to cover major expenses, such as home remodeling, or to consolidate debt. To secure a home equity loan from a lending institution, you as the borrower use your home as collateral. A home equity loan can be borrowed from a lender before or after you pay off the mortgage. To qualify, the property must hold equity, which determines the minimum and maximum loan amounts available.

Which bank has the best home equity loan?
  • To select a lender to provide the best home equity loan for you, start by comparing offers from several lenders. Your local banking center is a great place to start. Make sure you compare all aspects of the loan options offered, such as terms, rates and any associated expenses like closing costs and application fees. Ask questions about any terms you don’t understand, so you can decide which loan offer best meets your needs.
What does loan-to-value ratio (LTV) mean, and how does it affect my home equity loan or HELOC rates?
  • A loan-to-value (LTV) ratio measures what you owe on your home versus the current appraised property value. Lenders consider your LTV ratio when you apply for a home equity product. If your LTV is 80% or lower, you’re likely to receive the best rate available.
How can you find the best HELOC lenders?
  • To find the best HELOC lenders, research online reviews and compile a list of your area’s top lenders by asking friends, family or your real estate agent for referrals. Narrow your list to two or three HELOC lenders after comparing fees, interest rates and repayment terms. If you’re uncomfortable shopping around for financial institutions, start with your current bank or a local credit union and compare rates. Because every borrower’s financial situation is unique, loan options other banks offer may provide a better fit for you than your current lender. When speaking to HELOC lenders at your preferred banks, share your goals and financial needs so they can assist you in determining the best HELOC option.
Can I get a HELOC on investment property?
  • Borrowers may obtain a HELOC on owner occupied properties only. Examples of these are primary residences or vacation homes that are never rented or occupied by other individuals. Since a home equity line of credit offers flexible borrowing and repayment options, it allows you to withdraw the amount you need, when you need it. You could utilize a HELOC to increase the value of your investment property or to add to your property investment portfolio.
What is a line of credit?
  • A line of credit offers a preset loan amount, or credit limit, that you can access at any time and use as needed, only paying interest on the money you choose to withdraw. Once approved for a line of credit loan, you can access the money through a bank card, checks, online transfers or branch withdrawals. You can repay a line of credit loan through flexible terms over a period of time, or all at once.
What is home equity?
  • Home equity is the difference between your property’s appraised value and the amount you still owe on your mortgage, known as a loan-to-value (LTV) ratio. A low LTV percentage generally means you’ll receive a lower interest rate for a home equity loan or home equity line of credit (HELOC), although each lender calculates rates a little differently. You can work to increase your home’s value in a number of ways, such as paying off your mortgage early or making certain home improvements.
What is a revolving line of credit?
  • A revolving line of credit allows you to repeatedly borrow against and pay off a credit line from a lending institution. You can continuously access the money from a revolving line of credit account until you reach the maximum amount, also known as a credit limit. You make payments on the amount used, including interest, or can choose to pay it off in full. You can continue borrowing against a revolving line of credit until you reach your credit limit. If you reach your credit limit, you can begin borrowing again once your balance is repaid. The three types of revolving credit accounts include personal lines of credit, credit cards and home equity lines of credit.
What is a fixed rate HELOC?
  • A fixed rate HELOC is a home equity line of credit with an interest rate that a lender cannot increase or decrease during the term of the agreement. Fixed rate HELOCs are growing in popularity, but most HELOCs only offer variable rates, which fluctuate with baseline rates set by the Federal Reserve Board. A hybrid HELOC, also called a convertible HELOC, typically lets you convert HELOC debt into a fixed rate loan, often for a fee. That prevents rate fluctuations on what you already owe but not on what you might borrow going forward.
    Note: Many lenders consider “hybrid HELOC” and “convertible HELOC” to be synonymous with fixed rate HELOC, so be sure to clarify how a lender uses the terminology.
What is the difference between a home equity loan and a home equity line of credit?
  • Home equity loans and home equity lines of credit (HELOCs) share many similarities. Both allow you to secure a loan based on the appraised value of your home, and both loans may also be referred to as a second mortgage. However, home equity loans and HELOCs also have several distinguishing factors. 

    The following features are unique to a home equity loan:
    • With a home equity loan, you can apply for the precise amount you want to borrow. Your loan will be calculated based on your home’s equity.
    • You’ll receive a fixed interest rate that doesn’t change throughout the life of your loan.
    • After you’re approved for a home equity loan, you’ll receive a single lump-sum distribution without the option to obtain additional funds.
    The following features describe a home equity line of credit:
    • HELOCs offer a revolving source of funds that you can borrow from as often as needed, as long as you don’t exceed the credit limit.
    • You can draw as much or as little money as you need from your HELOC, and you’ll only pay interest on the money you use. 
    • Similar to a credit card, HELOC funds become instantly available for use again as the money borrowed is repaid.
    • HELOCs often include a variable interest rate that may fluctuate over the life of the loan.
How many times may I access my Home Equity Line of Credit funds?
How can I access my Home Equity Line of Credit funds?

    Once approved for a HELOC, you can access funds through various methods. Your options include the following:

    1. Credit line equity access checks or credit card: You may access funds via credit line equity access checks or credit card transactions. The transaction must use the equity access checks or card associated with your HELOC.
    2. Online: Simply log in to your online banking account and easily transfer money from your HELOC directly into your checking or savings account.
    3. Telephone request, request by mail or in-person request: Customers may call the bank, mail a request to the bank or go into a branch to request available HELOC funds be transferred into their checking or savings account.
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 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 higher rate of interest because they are generally considered a greater risk of default than those with comparatively lower LTVs.

    LTV is typically calculated as:

    LTV  =  Mortgage Amount / Appraised Property Value

What are approved uses of a Home Equity Loan or Home Equity Line of Credit (HELOC)?

    Home equity loans and home equity lines of credit (HELOCs) are very flexible and may be used for almost any expense, including:

    • Home improvements (remodeling a room or replacing an HVAC)
    • Debt consolidation (credit cards, loans, medical bills)
    • College tuition and expenses 
    • New car 
    • Car refinance
    • Recreational vehicles (boats, motorcycles, ATVs)
    • Vacations (airfare, hotel, expenses)
    • Unexpected expenses (medical bills, new furnace
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.
    • A fixed rate of interest over a fixed amount of time.
    • Single lump-sum distribution of the money 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 money at any time as well as multiple times, over a predefined time period.
    • The ability to draw money in any increments.
    • As soon as the principal is paid, the funds are instantly available for use again.
    • A variable rate of interest that may fluctuate over the life of the loan.
What do I need to know about a home equity line of credit?

    The amount you can borrow with a home equity line of credit (HELOC) is based on your home’s value and your mortgage balance. Depending on your credit score and outstanding debt, you may be able to borrow up to 89% of the appraised value of your home less the amount you owe on your first mortgage.
    Most home equity line of credit loans have variable interest rates. These rates may offer lower monthly payments at first, but during the rest of the repayment period, the payments may change. There is a chance monthly payments may go up.
    Similar to a real estate mortgage, HELOCs require you to use your home as collateral for the loan. This may put your home at risk if your payment is late or you can't make your payment at all.
What is a Home Equity Line of Credit (HELOC)?
  • A home equity line of credit (often called HELOC and pronounced Hee-lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower's equity in his/her house (akin to a second mortgage).

     A home equity line of credit works more like a credit card. You are allowed to borrow up to a certain amount for the life of the loan -- a time limit set by the lender. During that time you can withdraw money as you need it. As you pay off the principal, your credit revolves and you can use it again.

Can I use the Smart Home Refis cashout option if I have equity in my home?
  • Yes. Assuming your home’s appraised value is at least 20% greater than the outstanding balance of your home’s original mortgage amount.

Can a Smart Home Refi lower my home mortgage interest rate?
  • Potentially. It depends on a couple of factors such as your current mortgage interest rate, remaining mortgage term, etc. Consult one of our trusted lending experts for a free consultation.

Does a Smart Home Refi require a home appraisal?
  • Yes. Your home must be appraised. First Merchants Bank will hire an appraiser to determine your home's fair market value.

Does a Smart Home Refi work if I already have a second mortgage?
  • Yes, assuming that the sum total of your first and second mortgages are less than or equal to 80% of your home’s appraised value.