Loan Types

VA Home Loans

The Veterans Administration Loan is a type of government loan is available to veterans who are currently serving or have served in the U.S. Armed Services.  In some cases, the spouses deceased veterans are also eligible. The requirements vary depending on the year of service and whether the discharge was honorable or dishonorable.

The Benefits of VA Loans:

• The borrower does not need a down payment.  100% financing is available.
• The loan is guaranteed by the Veterans Administration, but funded by a conventional lender.

Reverse Mortgage Loans

A reverse mortgage allows a homeowner who is over 62 years old to borrow equity from their home, provided there is enough equity to begin with.  The homeowner’s obligation to repay the loan is deferred until the owner dies, the home is sold or the owner leaves into aged care.  It is always advisable to consult a financial advisor before considering a reverse mortgage.

The Benefits of Reverse Mortgages:

• Excellent source of money when you can’t work
• Money received through reverse mortgages are tax free

Refinance Home Loans

A mortgage refinance loan deals with the replacement of your existing mortgage with a new mortgage that contains different terms.  There are two types of refinance loans:

• No-Closing Cost – the borrower will pay fewer upfront fees to get the loan.
• Cash-Out – the borrower can refinance for a higher amount than their current principal and use the extra funds as cash.  Most borrowers use this for home improvements, credit card and other debt consolidation.

The Benefits of Refinance Loans:

• Reduce interest rates by refinancing to a lower rate
• Shorten the length of your mortgage
• Access cash for home repairs, debt consolidation or medical bills

Interest Only Home Loans

Interest-only mortgages are loans secured by real estate which have an option to make payments on the interest for a period of time. That time period is limited to the first five or ten years of the loan. After that period, the loan is amortized for the remainder of its term. This means the payments move up to an amortized amount but the loan balance is not increased. Two popular mortgages are a 30-year loan where the borrower has the option to pay interest-only for the first 60 months and a 40-year loan where the borrower has the option to pay interest-only for the first 120 months of the loan.

Home Equity Loan

How does a home equity loan work?

A home equity loan  is a type of loan in which the borrower uses the value of a homeowner’s unencumbered interest in their property (equity) in their home as collateral.  These home equity lines of credit loans create a lien against the home and thus reduce the home’s equity.   Majority of borrowers use the home equity loan type to pay off high balances on credit cards.

There are two types of home equity loans:

• Closed End – the borrower gets a lump sum at closing
• Open End or HELOC (Home Equity Line Of Credit) – the borrower can choose when and how often they borrow against the property within their credit limit.

The Benefits of Home Equity Loans:

• Easy source of cash
• Lower interest rates than credit cards or other consumer loans
• Help finance home repairs, medical bills or college education

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