Let
our family of Mortgage Professionals help you to decide
what type of loan best fits your needs.
There are many different types of loans available for
individuals wishing to purchase a new home or refinance
a mortgage on their current home. At InterLinc, we treat
each loan applicant individually, and do not promote
“generic” or a “one size fits all”
product. We understand that every borrower’s situation
is unique and each loan should be tailored to their
specific needs. Our customers have shown us that this
personal attention gives them the trust, confidence,
and flexibility needed for their financial future.
The
following is a summary of the most common types of loans
to finance a residential property.
Purchase Loans
Purchase Loans are mortgages used to finance the purchase
of a home. Whether you are buying a single family home,
townhouse or condo, if you are not paying cash, you'll
need a purchase mortgage.
Refinance Loans
Refinance Loans are used to replace the current financing
for a residential property. Borrowers frequently consider
refinancing a loan to convert some the equity built
up in their home into cash, reduce their mortgage rate,
change the type of financing (such as moving from an
Adjustable Rate Mortgage to a Fixed Rate loan) or to
reduce the length or term of their loan.
Fixed Rate Mortgages (FRMs)
Fixed Rate Mortgages (FRMs) have a set or "fixed"
interest rate that does not change during the life of
the loan. Because the rate does not go up or down, the
combined principal and interest (P&I) payment is
consistent for the life of the loan. For borrowers who
want a stable payment and expect to remain in their
home for at least 3-5 years, a fixed rate loan may be
the best option.
Fixed rate loans generally have a loan term or length
of 10, 15, 20, 30 or even 40 years. A loan with a shorter
term will usually have a lower interest rate, but the
payment will be higher since the loan amount is paid
back over a shorter period of time. If you think you
may want to pay off your loan earlier, but don't want
to commit to a higher monthly payment, consider a 20
or 30 year loan term; you can always pay extra principle,
to pay off the loan faster.
Interest Only Loans
Interest Only Loans allow a borrower to pay only the
interest due on their loan for a certain period of time,
often 3 – 5 years. Once the interest only period
ends, the borrower must begin to pay principal and interest
payments or refinance the loan. Interest only options
are available for both Adjustable Rate and Fixed Rate
loans.
Home Equity Loans
Home Equity Loans are used to access the equity or stored
value in a borrower's home. These loans are structured
either as a Home Equity Line of Credit (HELOC) or an
Adjustable Rate or Fixed Rate Home Equity Loan. With
a HELOC, the borrower can access the line of credit
for cash needed for home improvements, college expenses
or other costs that may vary over time. The payment
on the HELOC changes depending on the outstanding balance
of the loan and the current interest rate. With a Home
Equity Loan, the borrower receives a lump sum payment
at closing, and the payments, unless changed in connection
with a change in the interest rate on an Adjustable
Rate loan remain the same, regardless of the loan balance.
Balloon Loans
Balloon Loans have a lower principal and interest payment,
based on a 30 year amortization for the term of the
loan, which is often 7 – 10 years. This allows
the borrower to pay a lower payment than a traditional
fixed rate mortgage with a comparable loan term. At
the conclusion of the 7 – 10 year loan term, the
loan balance becomes due. Most borrowers choose to pay
off the mortgage by selling the home or refinancing
the mortgage at that time.
