First Mortgage – A First Mortgage is the primary loan that is used to purchase a house or other real estate property. The First Mortgage loan is secured by the lender placing a lien on the house or property that you purchase with the loan. Among all the types of loans, First Mortgage programs offer the most flexibility. They can be at a fixed interest rate or a variable interest rate. These rates sometimes offer great programs such as first-time homebuyer's discount, no closing costs, no money down, 100% loan (a loan for 100% of the value of your home), and pre-approved loans for prospective homebuyers.
A Refinance Loan - A Refinance Loan replaces the original loan or loans on your property with a new loan. This loan can be used to lower your mortgage interest rate or consolidate multiple home loans that you may have on your property. It can also allow you to take out equity on your home by taking out a loan larger than your original mortgage. Also, a Refinance Loan has the same terms as a traditional mortgage loan.
Second Mortgage - A Second Mortgage is a loan that is secondary to the first mortgage. In the event that you default on your loan, this would mean a first mortgage lender would have first rights to the property before the second mortgage lender can stake their claims. Since a second mortgage has a higher level of risk, these loans normally carry a higher interest rate than the first mortgage. When you evaluate second mortgage options, you should decide whether if it is better to get a second mortgage or to refinance your existing mortgage with a larger loan. To help with that decision, you can look at the interest rate of your current mortgage. If that rate is very low, then it would be good judgment to get a second mortgage. If you believe that you can refinance a larger mortgage at or about the same interest rate, then you may be better off using a refinance loan.
Home Equity Loan - A Home Equity Loan is used to withdraw equity from your home without having to refinance your original loan. These loans are normally faster and easier to obtain when compared to a typical mortgage. They are also appealing since you can allow them to fund things such as auto or other miscellaneous purchases and are normally tax deductible. Home Equity loans come in a variety of types and can range from 5 to 30 years. They can also be fixed rate or variable rate.
Home Equity Line of Credit (HELOC) – The HELOC loan is similar to a credit card loan except for the fact that it is secured by a lien against your home and is tax deductible. This loan allows you to withdraw cash only when you need it and normally stays open for approximately 15 to 25 years. The terms on a home equity line of credit include a fixed rate, variable rate, interest rate on unused portion, principal only repayments, and varying rates depending on percentage used. There are also many different loan lengths which normally range from 10 and 25 years.
Fixed Rate Loan - A Fixed Rate Loan is when you pay a fixed interest rate over the lifetime of the loan. These loans normally have a higher interest rate than a variable rate loan. However, they are also protected from upward swings in interest rates.
Variable Rate Loan – A Variable Rate Loan is also known as an adjustable rate (ARM) loan. This type of loan has an interest rate that varies over the lifetime of the loan. The interest rate is normally attached to a benchmark interest rate such as the Prime Interest Rate or the LIBOR rate. The rate can also be adjusted on a daily, weekly, quarterly or even an annual basis.
Debt Consolidation Loan - A Debt Consolidation Loan consolidates all of your credit card debt, personal loans, auto loans, boat loans, and any other loans that you have with one loan. These loans are usually backed by the equity of your home. They are also beneficial since they can reduce your monthly payments and lower your interest rate by a significant amount.
Bad Credit Loan - A Bad Credit Loan is a loan for a person with bad credit. These loans normally have a higher interest rate than a typical loan and are typically made for a smaller percentage of the equity of your home. Bad Credit Loans are also known as sub prime loans.