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What are the pros and cons of a HELOC?
  • To decide if a home equity line of credit (HELOC) best meets your financial needs and goals, consider how long you will need to use the money, what you plan to spend it on and how long it will take to pay back. HELOC benefits include flexibility and easy access to your funds. It’s an open-ended product that you can secure as a financial safety net or designate for specific expenses. While HELOCs often don’t have closing costs and offer lower interest rates than unsecured credit lines, it is typically a variable-rate product and may not be the right choice if you need to borrow a large sum of money all at once.
     
    HELOC pros: 
    • Flexible use
    • Easy access to funds
    • Low, interest only payments
    • Fixed-rate interest option
    • Low to no closing costs
     
    HELOC cons:
    • Variable interest rate
    • Not ideal for all large, one-time expenses
    • Home becomes collateral
    • Additional monthly debt payment
     
Can you use a HELOC to pay off a mortgage?
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 are the differences between a home equity line of credit (HELOC) and home equity loan, and how do those differ from refinancing?
  • A home equity line of credit (HELOC) provides borrowers with an open-ended loan, or access to low-interest credit with no fixed end date, that homeowners can use as needed. A home equity loan, on the other hand, is an installment loan that pays the borrower the entire loan amount upfront and requires fixed monthly payments. Both are secured by your home’s current value minus the amount of outstanding debt owed on the property. A HELOC best suits those who want access to cash over a period of time, rather than one large lump sum like a home equity loan offers. 
     
    HELOCs and home equity loans essentially function like a second mortgage, whereas a refinance means paying off your current mortgage with a new mortgage loan, often locked in at a lower interest rate. 
     
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.
     
Is private banking worth it?
  • The private banking relationship offered to qualifying clients extends a multitude of exclusive benefits. Private banking clients receive dedicated financial guidance and expertise for their overall personal balance sheet, exclusive cash management products, customized financing solutions and specialized mortgage options.

What mortgage services are available to private banking clients?
  • Private banking clients receive specialized portfolio mortgages to finance home purchases. Private bankers work in conjunction with mortgage experts to assist prospective home buyers and evaluate how a real estate purchase fits within their overall wealth management goals. This private banking and mortgage officer team also helps clients gain access to competitive financing options and provides insights to streamline the mortgage application process.
What is the difference between commercial banking and private banking?
  • By definition, private banking is a personalized service typically limited to individuals of verified high net worth and/or personal cash flow who require specialized banking services, including depository and custom lending solutions. Commercial banking serves a much wider clientele and provides services and solutions to business clients.
What is the definition of private banking?
  • Private banking defines an array of personalized financial resources, banking services and benefits available exclusively to individuals of verified high net worth and personal cash flow. Private banking services vary by financial institution but often include custom lending solutions and personal cash management, accessed through a dedicated private banker.
What is the difference between private banking and wealth management?
  • Private banking is an advisory and execution service for high net worth individuals seeking tailored depository and financing solutions. Wealth management, by comparison, provides advice and execution of investments for clients. Clients can access wealth management services at First Merchants regardless of their net worth.
What is private banking?
  • Private banking provides affluent individuals and families access to exclusive financial services with preferred interest rates. Private banking clients receive customized, long-term, personal attention from their private banker as they establish, pursue and modify financial goals and strategies. This holistic approach offers direct access to tailored financial guidance through a single point person for banking solutions in personal cash management and specialty lending options.
What is the importance of financial planning for a business?
  • To prepare your business for future financial success, you must develop and maintain a financial plan. Financial planning for a business allows you to analyze your current financial status and measure growth. This plan will allow you to measure how well the company performed. Your business’s financial plan should also have room for variables such as economic fluctuations, employee growth and new business ventures.
How do I start financial planning?
  • For business banking: 
    Establish clear goals. These will serve as the foundation of your business’s financial plan. This planning will include assessing current debts and liquidity, economic growth and market competition. All of these areas will factor into your financial planning. 
     
    For personal banking: 
    Establish clear goals and develop a retirement plan. Do you want to retire and move to a warmer climate? Do you want to pay off your house and carry no debt? Do you want to have enough money set aside to take an annual vacation during retirement? Answering these questions can help you lay the groundwork for how much you need to save or invest to prepare for retirement. 
     
How do I set up a financial plan?
  • When setting up a financial plan, you should design a strategy to meet your investment goals using the following methodology: 
     
    1. Create a budget. This will help lay a foundation to guide all future financial planning. 
    2. Ensure your financial plan accounts for all applicable taxes on your cash flow. 
    3. Set aside money for an emergency fund. Reserve money for emergencies that could arise before and during retirement. This could help cover car repairs, home maintenance and medical treatment.
    4. Invest beyond your 401(k). Set aside a separate banking account for savings. Consider a Roth IRA. 
    5. Manage your debt so you can retire debt-free., so that upon retirement you are starting with a clean balance.
Why is it important to have a financial plan?
  • Financial planning helps you determine your short- and long-term financial goals and create a balanced plan to meet those goals. 
What is the first step in developing a financial plan?
  • The first step in developing a financial plan is to determine your short- and long-term goals. Before finalizing these goals, you will need to assess your current income, debt and emergency fund. After assessing these items, you can adjust where your assets are divided in order to plan for retirement.