The Home Equity Option is a unique tax-saving opportunity that lets you secure your MEFA loan against the equity on your home. You may deduct the interest paid on the loan as "qualified residence interest" from your federal and state income taxes if your income exceeds the limit for the Student Loan Interest Deduction.

The Home Equity Option is not a separate loan. This special program gives your education loan the benefit of MEFA's low interest rates and the tax advantages of a home equity loan.

• You can deduct your MEFA loan interest from your taxable income.
• All you need to qualify is equity on your home. There is no maximum income level to participate.
• Your MEFA loan may be secured with up to 100% of the equity in your home.
• The entire process is done by mail for your convenience.
• You can apply at any time during loan repayment. You do not have to apply for the Home Equity Option right away. However, the earlier you apply, the greater your tax savings will be.

The amount of equity you have available determines how much of your MEFA loan(s) can be secured. Primary or secondary properties, cooperatives, and properties held in trust can all be secured. MEFA does not require an independent appraisal. We ask for the fair market value of your property based on any of the following:

• A tax assessment
• A real estate broker's opinion of value
• A recent appraisal
• Your personal knowledge of comparable sales

MEFA will discharge the Home Equity Option as soon as your loan is paid off or can release the Home Equity Option prior to loan payoff for a fee of $125. If you plan to refinance or take another mortgage, MEFA will sign an agreement to subordinate its mortgage to a future mortgage holder for a fee of $125.

To qualify for the Home Equity Option, you must have enough equity in your home to cover the amount of the loan(s) you are securing.

The Home Equity Option is available for borrowers with properties located in the United States. At this time, properties in Michigan, New Jersey, Pennsylvania, and Puerto Rico do not qualify.

Once you have been approved for a MEFA loan, you can complete the Home Equity Option application (PDF) (PLEASE NOTE: Clicking this link will take you away from the MEFA web site.) or call MEFA at 800-842-1531, press option 1, then option 3.

Return your completed application with:

• A copy of your most recent mortgage statement
• A copy of your recorded deed
• A copy of the promissory note for each MEFA loan to be secured
• The application fee
  

If you have questions or want to request a Home Equity Option brochure and application, call a Home Equity Specialist at 1-800-842-1531, press option 1, then option 3. Specialists are available Monday - Friday 9a.m. - 5 p.m. EST.