If you got your home loan when interest rates were higher
than they are now, you can borrow the money for your home
again at a lower interest rate and use the money to pay off
the old loan. This is known as refinancing.
If you have many creditors at relatively high interest rates
like credit cards, personal loans, car and boat loans, you
can get a loan on your house at today’s low rates and
use the money to pay off all the smaller bills. You can combine
everything into one loan at a lower interest rate and payment.
As a general rule of thumb it’s not a good idea to finance
short-term purchases (food, entertainment, vacations, non-durable
goods) with long-term debt, but if you have gotten in over
your head the equity in your home can be a lifesaver.
Choose this option if you are planning a major improvement
to your existing home and you don’t want to refinance
your first mortgage because the rate is low or the prepayment
penalty is too high. Home improvement loans are typically
second mortgages because you are not replacing your fist mortgage.
If you are buying a home select this option. Often you can
find better financing than the seller or the realtor is offering
for your purchase.
Select the FHA or VA purchase or refinance options if the
loan you are looking for would be a government insured loan
through the Veterans Administration or Federal Housing Administration.
First time homebuyers would want to choose this type of loan.
If you want to take advantage of the FHA or VA “streamline”
refinance program, minimal qualifying is necessary for this
type of loan.
If you are building a home choose this loan type. Lenders
that specialize in this loan type can lend you the money to
build on a property you already own or one you want to buy.
If you own the land already they will lend you a percentage
of the properties future value. If you don’t own it
yet, they will lend you a percentage of its existing value.
If the primary function of your property is to host a business
then the loan would be considered a commercial loan.
A reverse mortgage is a loan the bank gives a borrower as
a steady monthly income. When the borrower dies the home is
sold and the loan is repaid. This is particularly well suited
for senior citizens who have paid off their homes.
Equity Line of Credit (HELOC)
A HELOC is a second mortgage that works like a revolving credit