Balloon & Home Equity Line of Credit Loans

Balloon & Home Equity Line of Credit Loans

Today I am going to discuss two very popular loan products that I come across that people have in today’s market.  These products are balloon loans and home equity line of credits, also known as a HELOC.  In past blogs I have discussed why these types of products are not always a good thing to have, but in this blog I will just discuss the aspects behind the product themselves. 

balloon loan property guidingBalloon Loan:

A balloon loan is a product that does not fully amortize.  Therefore, it is a partial amortization loan.  This means that the payment term is longer than the actual loan term.  For example, it could be a 30 year payment on a 15 year term.  This would be expressed as a 30/15 or 180/360 when expressed as months.  Let’s say you have a $100,000 loan at 6.00%.  The monthly payment might be $600 for 179 payments, and then a balloon of a $75,000 lump sum on the 180th payment would be due at once.  The most common terms found on this type of loan are 5, 7, and 10 years.

Home Equity Line of Credit (HELOC):

A home equity line of credit can simply be thought of as having a credit card that is secured by the equity in your home.  This open ended revolving credit uses your home as collateral and is typically a second mortgage or junior lien.  There is a draw period which outlines the time in which one can withdraw funds, and then a repayment period time in which the loan amortizes.  This type of loan typically is a conventional non-conforming loan and is tied to the Prime index calculating interest on a daily basis.

Not sure who to call or where to start? Contact me today for a 100% free no-obligation loan inquiry analysis.

Matt Pell,  Loan Officer
Mortgage Warehouse, LLC
(239) 672-8502 – Direct Line
(239) 344-9223 – Fax
Company NMLS ID – 137154
Individual NMLS ID – 1018529
Better Business Bureau Rating = A+

Posted on September 23, 2013, in Finance and tagged , , , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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