• Home Equity Loan Types

Depending on the lender and the prevailing credit and money supply, there are a number of different Home Loan products that the customer can choose.

  • What Should I Be Aware Of?

Rates will depend on whether you are looking to for a Home Purchase, Equity Home Loan or establish an Equity Line of Credit. Most lenders offer a combination of Loans with payments that depend on a number of factors most notably the amount of time the borrower intends to occupy the property that is used to secure the loan, whether the borrower is looking for a low monthly payment, if the borrower is looking to “build-up” equity, and the borrower’s willingness to assume the risk of changing interest rates. Depending on the level of the borrower’s financial priorities and willingness to assume some market risk of changing interest rates, a borrower can choose among a few Home Loans and Equity Home Loans options. Among those choices are:

Fixed Rate Loan Mortgages for a few as 15, 20 and up to 30 years. Again, the interest rate is fixed and the monthly payments stay the same throughout the life of the loan. A Fixed Rate Loan may be best suited to those borrowers who are risk adverse or those borrowers that feel that there is a likelihood of increased interest rates in the near term. Adjustable Rate Mortgages for 1, 3, 5, 7 or 10 years. These types of Mortgages are generally considered to be riskier that a Fixed Rate Loan because the interest rate can increase. As part of the Borrowers financial needs and objectives, there may be an opportunity to have a lower monthly mortgage payment in times when inflation is low and the prospect of increased rates is unlikely. Balloon Mortgages for three, five or seven year periods where there are interest-only payments (in addition to taxes and insurance) amortized over a thirty year term but where, upon the expiration of the term, the entire principal balance becomes due.

Generally speaking, the shorter the term of your Home Loan or your Equity Line of Credit, the faster the loan is paid off. For example, in the case of a 30, 15 or even a 10 year Home Loan payment term, a 10 year fully amortized loan will usually be paid off quicker than its 15 year or 30 year counterpart. Depending on the Lender and the laws of each state, the Borrower may be eligible for a Home Loan or Equity Home Loan that exceeds the value of the property being purchased. In some cases and under certain lending and financial circumstances, the loan to value ration for a Home Loan can be up to 110% of the purchase price. In cases of Home Loans the amount borrowed may be classified by the lender in one of two categories: Those loan categories are commonly referred to as conventional loans or jumbo loans. Conventional Loans are loans that are usually less than $225,000.00 while Jumbo Loans are more than $225,000.00 and can be in the millions of dollars.



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