Home Equity Line of Credit in Montana
While Montana might not be the most populated state in America with only one million people living state-wide, it is one of the most appreciation-increasing areas of the country. Most homes in Montana sell for roughly $250,000 and appreciation values are on the rise for most towns and cities. Sidney and Glendive are the two most affected cities by this increase in value. Approximately 60 percent of residents living in Montana own their own homes, allowing these people to build solid equity in their properties.
Info on HELOCs
A home equity line of credit is a term many homeowners have heard. Like a home equity loan, the HELOC uses the equity you’ve built in your home to provide you with cash. What makes a HELOC different from a loan is that you use it similarly to a credit card. A loan provides you with a large lump sum of money right off the bat, whereas a credit line can be withdrawn on whenever you need funds. Your home is used as collateral to protect the bank if they should suffer losses due to a delinquent account.
What are the Benefits?
HELOCs provide more of a draw limit than your typical credit card. The average American with a good credit score can be approved for a credit card with a limit of about $20,000. With a home equity line of credit, your draw is worth 85 percent of the value of your home. This means you could potentially be sitting on hundreds of thousands of dollars worth of money at your disposal. Another advantage to opening a HELOC is that a homeowner’s credit score isn’t as much of a deciding factor as their home’s assessment. If you have a bad FICO score, you could still be approved for a reasonably priced credit line.
How to Apply and What to Expect
You will need to visit a local Montana bank to see if they offer HELOC accounts. Once you find a trustworthy bank, you’ll need to begin going through their application process. During the application, you’ll be asked to provide documentation of your home and its value. If your home has not been assessed in the past five years, you’ll need to get a county assessor in to do the evaluation for you. Most banks will only approve applicants who have vested at least 40 percent in the form of mortgage payments into their home’s ultimate value. Ideally, you should have also owned your home for at least five or ten years.
Interest Rate Comparison
The current standard interest rate in Montana attached to HELOC accounts is 5.5 percent. This isn’t to say that you won’t be able to find anything lower, but you’ll notice that the majority of banks you go to offer this rate. Be careful of new sign-on member bonuses that offer very low rates to draw clients in and then go up after the first six months of having your account. You’ll also need to determine if you’d like a variable or fixed rate for your home equity line of credit. Variable rates are great when the market is booming and interest is low, but they can become a problem if the current housing marketing in Montana dwindles.
Banks in Montana Offering HELOCs
- Stockman Bank
- Wells Fargo
- Valley Bank of Kalispell