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We offer over a variety of loan products
for
every imaginable type of loan for all credit grades.
In addition, we have access to grant programs throughout
Illinois.
Home equity loan
- Cash Out
Do you need
to tap into your home’s equity to pay for a home remodeling
project or to pay off a credit card? A home equity loan is a
fixed or adjustable rate loan that is secured by the equity
in your home. With a home equity loan, you borrow a lump sum
of money to be paid back monthly over a set time frame, much
like your first mortgage. The terms home equity loan and
second mortgage are often used interchangeably.
The process
for a home equity loan is similar to your first mortgage.
The closing costs (often 2-3 percent of the loan amount) are
usually lower and, although the interest rate is higher on a
home equity loan, the interest paid is tax deductible.
To qualify
for second mortgage, your credit must be in good standing
and you must be able to document your income. An appraisal
will be required on your home to determine the home's market
value.
Which
refinancing option is best for you? - Refinancing
There aren't quite as many loan programs as there are
borrowers, but it seems like it sometimes! We'll work with
you to qualify you for the best loan program to fit your
needs. But there are some general considerations you can
have in mind in advance.
Are you refinancing primarily to lower your rate and monthly
payments? Then your best option might be a low fixed-rate
loan. Maybe you have a fixed-rate mortgage now with a higher
rate, or maybe you have an ARM -- adjustable rate mortgage
-- where the interest rate varies. Even if it's low now,
unlike your ARM, when you qualify for a fixed-rate mortgage
you lock that low rate in for the life of your loan. This is
especially a good idea if you don't think you'll be moving
within the next five years or so. On the other hand, if you
do see yourself moving within the next few years, an ARM
with a low initial rate might be the best way to lower your
monthly payment.
Not quite
sure when to refinance?
Click here to
view some tips that will help in your decision.
Are you refinancing primarily to cash out some home equity?
Maybe you want to pay for home improvements, pay your
child's college tuition bill, take your dream vacation,
whatever. Then you'll want to qualify for a loan for more
than the balance remaining on your current mortgage. If
you've had your current mortgage for a number of years
and/or have a mortgage whose interest rate is higher, you
may be able to do this without increasing your monthly
payment.
You want to cash out some equity to consolidate other debt?
Good idea! If you have the equity in your home to make it
work, paying off other debt with higher interest rates than
the interest rate on your mortgage -- for example, credit
cards, home equity loans, car loans, some student loans --
means you can save possibly hundreds of dollars a month.
Do you want to build up home equity more quickly, and pay
off your mortgage sooner? Consider refinancing with a
shorter-term loan, such as a 15-year mortgage. Your payments
will be higher than with a longer-term loan, but in
exchange, you will pay substantially less interest and will
build up equity more quickly. If you have had your current
30-year mortgage for a number of years and the loan balance
is relatively low, you may be able to do this without
increasing your monthly payment -- you may even be able to
save! For example, let's say years ago you took out a
$150,000 30-year mortgage at eight percent. Your payment is
about $1,100, exclusive of taxes, insurance and so on. If
your balance today is down to $130,000, you might take out a
15-year mortgage at six percent and have an almost identical
monthly payment. This is a great option for people whose
main goal is not to save money on their monthly payment but
rather want to build up equity and pay off their home more
quickly.
Reverse
Mortgages
Reverse mortgages (also called home equity conversion loans)
enable elderly homeowners to tap into their equity without
selling their home. The lender pays you money based on the
equity you've accrued in your home; you receive a lump sum,
a monthly payment or a line of credit. Repayment is not
necessary until the borrower sells the property, moves into
a retirement community or passes away. When you sell your
home or no longer use it as your primary residence, you or
your estate must repay the cash you received from the
reverse mortgage plus interest and other finance charges to
the lender.
Most reverse mortgages require you be at least 62 years of
age, have a low or zero balance owed against your home and
maintain the property as your principal residence.
Reverse mortgages are ideal for homeowners who are retired
or no longer working and need to supplement their income.
Interest rates can be fixed or adjustable and the money is
nontaxable and does not interfere with Social Security or
Medicare benefits. Your lender cannot take property away if
you outlive your loan nor can you be forced to sell your
home to pay off your loan even if the loan balance grows to
exceed property value.
What are the
advantages of fixed rate versus adjustable rate loans?
With a fixed-rate
loan, your monthly payment of principal and
interest never change for the life of your loan. Your
property taxes may go up (we almost said down, too!), and so
might your homeowner's insurance premium part of your
monthly payment, but generally with a fixed-rate loan your
payment will be very stable.
Fixed-rate loans are
available in all sorts of shapes and sizes: 30-year,
20-year, 15-year, even 10-year. Some fixed-rate mortgages
are called "biweekly" mortgages and shorten the life of your
loan. You pay every two weeks, a total of 26 payments a year
-- which adds up to an "extra" monthly payment every year.
During the early
amortization period of a fixed-rate loan, a large percentage
of your monthly payment goes toward interest, and a much
smaller part toward principal. That gradually reverses
itself as the loan ages.
You might choose a
fixed-rate loan if you want to lock in a low rate. If you
have an Adjustable Rate Mortgage (ARM) now, refinancing with
a fixed-rate loan can give you more monthly payment
stability.
Adjustable Rate
Mortgages -- ARMs, as we called them above -- come
in even more varieties. Generally, ARMs determine what you
must pay based on an outside index, perhaps the 6-month
Certificate of Deposit (CD) rate, the one-year Treasury
Security rate, the Federal Home Loan Bank's 11th District
Cost of Funds Index (COFI), or others. They may adjust every
six months or once a year.
Most programs have a "cap"
that protects you from your monthly payment going up too
much at once. There may be a cap on how much your interest
rate can go up in one period -- say, no more than two
percent per year, even if the underlying index goes up by
more than two percent. You may have a "payment cap," that
instead of capping the interest rate directly caps the
amount your monthly payment can go up in one period. In
addition, almost all ARM programs have a "lifetime cap" --
your interest rate can never exceed that cap amount, no
matter what.
ARMs often have their
lowest, most attractive rates at the beginning of the loan,
and can guarantee that rate for anywhere from a month to ten
years. You may hear people talking about or read about what
are called "3/1 ARMs" or "5/1 ARMs" or the like. That means
that the introductory rate is set for three or five years,
and then adjusts according to an index every year thereafter
for the life of the loan. Loans like this are often best for
people who anticipate moving -- and therefore selling the
house to be mortgaged -- within three or five years,
depending on how long the lower rate will be in effect.
You might choose an ARM to
take advantage of a lower introductory rate and count on
either moving, refinancing again or simply absorbing the
higher rate after the introductory rate goes up. With ARMs,
you do risk your rate going up, but you also take advantage
when rates go down by pocketing more money each month that
would otherwise have gone toward your mortgage payment.
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