Home Loans, Loan Types
For many of us, it’s the largest investment we make. For first-time home buyers, it can be intimidating. That’s why we offer a variety of loan plans and experienced lending professionals to help you structure a loan plan that fits your individual needs. Simply contact our team to help with pre-approval of mortgage loans and financing options:
TYPES OF LOANS/MORTGAGES OFFERED BY
INVESTORS COMMUNITY BANK
FIXED RATE MORTGAGE
A fixed rate mortgage is a long-term loan used to finance a residential real estate purchase or refinance. Monthly payments remain the same for the term of the loan, no matter what happens to market interest rates. This predetermined expense is one of a fixed-rate loan’s most attractive features, since you always know exactly what your mortgage principal and interest payment will be. Typical terms for fixed-rate mortgages are 15, 20 or 30 years.
A balloon mortgage is a real estate loan with monthly payments as if the loan would be paid in full over a period of time, usually 15 or 30 years. The interest rate is locked for usually two or three years with the principal due at the end of the lock period. These loans are usually refinanced when the note expires.
HOME EQUITY LOAN
A home equity loan, sometimes called a second mortgage, is secured by the equity in your principal residence. The collateral for the loan is the equity in your home. The loan amount is generally the difference between the homeowner’s equity in the house and the market value of the house. The homeowner receives the amount of the loan in a lump sum and may use it to finance other purchases or ventures. Generally the maximum loan is 80% of the value of the home.
HOME EQUITY LINES OF CREDIT (HELOC)
This is a line of credit borrowed against the value of a principal residence. HELOCs operate like a credit card with a limit on the amount borrowed. Homeowners may use this credit line to finance other purchases or ventures. Whatever amount is borrowed reduces the available balance until it is repaid, then the principal is available for use. These loans generally have variable interest rates; payments of principal and interest will begin as soon as the money is borrowed. Terms of repayment vary and will be spelled out in your agreement.
A construction loan finances the construction of a home and typically interest is only paid during the construction period. The maximum term for the loan is usually six months. Once construction is over, the loan amount is due and will need to be refinanced. During construction, money is advanced incrementally as construction progresses; typically these draws are handled through a title company.
All loans are subject to limitations and qualifications.
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Page Last Updated 06/13/2014