With a variety of options available, your Rivers Edge Bank mortgage loan officer will work with you to find a product that fits your goals. Some things to consider when planning for your mortgage would be term length, rate lock, servicing of payments, type of property, down payment level and flexibility with credit history. Once you’ve determined which of these are most important to you, it will help to decide which loan product is best for you.
Fixed Rate Mortgages
For homeowners craving consistency, fixed-rate mortgages offer a steady repayment schedule throughout the life of the mortgage term. The interest rate remains the same during the entire repayment period, so monthly payments are the same. This stability is why the average homeowner relies on a fixed-rate mortgage, typically over a 30-year term. However, repayment periods are not uncommon to be as short as ten years. Those with longer terms pay more interest over time, but monthly payments are often more affordable over a longer span. We know it can be daunting to commit to making payments over such an extended period. That’s why Rivers Edge Bank offers competitive interest rates, so staying steady with a fixed-rate mortgage pays off in the long run.
Secondary Market Loans
Rivers Edge Bank is proud to partner with Iowa Bankers Mortgage Corporation (IBMC) to offer long-term fixed rate mortgage loans. What does this mean for you? With a secondary market loan through MPF, you will work with a Rivers Edge Bank loan officer and their team all the way through closing. We then transfer servicing to IBMC meaning you’ll make payments to them. Don’t worry, Rivers Edge Bank will remain your lender and will be able to assist you with any questions or concerns in conjunction with IBMC. Some of the benefits of a secondary market loan with IBMC include down payments as low as 5% (3% for first-time homebuyers), PMI available, and lockable rates.
Hobby Farm/ Acreage Loans
For those who have ag income from their property, we have a product for you too! We work with Compeer Financial to offer 15- or 30-year, fixed rate mortgage loan options. The process works very similarly to the IBMC/MPF program listed above. You will work with the Rivers Edge Bank mortgage team to complete your loan and, even though servicing transfers to Rural Living Solutions, we are here to help you with questions or concerns.
In-House Balloon Loans
Wanting to keep your home loan local? Rivers Edge Bank offers in-house servicing as well! Keeping your loan local allows us to work closely with you, gives us flexibility with underwriting, and could mean less in closing costs. Rivers Edge Bank has our rates set separately from the market, so they don’t fluctuate near as much as the secondary market rates. With an in-house balloon loan, your rate would be fixed until the maturity date of the loan. While our terms are shorter than those offered in our secondary market products, we often find most mortgages are refinanced before the 30-year mark, whether it’s due to home improvements, moving, or some other life change.
What’s a balloon loan?
A balloon loan means that the loan has a larger-than-usual, one-time payment, typically at the end of the loan term. This one-time payment is called a “balloon payment.” Don’t let the short term of our balloon loans scare you! They are a shorter term, but they are amortized out for up to 30 years. What that means is we take your requested loan amount, break down the payments to spread over those years to calculate your monthly payment. The loan will then mature in that shorter term and a balloon payment will be due. At that time, your options would include refinancing, extending, or paying the balloon payment.
What does in-house and retained servicing mean?
Your loan would stay at Rivers Edge Bank start to finish. We would keep your loan on our system which means you’ll be able to view in Online and Mobile Banking, make payments here, and continue working directly with your loan officer
Government Guaranteed/ SD Housing Financing Options
Government Guaranteed Loans. Rivers Edge Bank can broker select government-guaranteed loans as an additional option for borrowers. Government-guaranteed loans, like FHA, USDA Rural Development, and VA loans, generally allow for more credit history and down payment flexibility. Conversely, they can have more stringent property requirements can have higher closing costs than a conventional mortgage. They can also carry an up-front and monthly guarantee fee, which can be in place for the entire life of the loan. Not everyone can qualify for these types of loans. If these are something in which you are interested, reach out to an REB lender to see if these are an option for you.
Rivers Edge also has access to broker SD Housing loans. SD Housing loan options are income-based and can be obtained in conjunction with both traditional and government guaranteed loans. There are opportunities for both first-time and repeat homebuyers and can include special features like down payment assistance and MCC tax credit options as well. For more information on the SD Housing loan options, visit the SD Housing website and contact your local REB lender.
When it comes to building your dream home, a construction line-of-credit is your ticket to getting the process started. These convenient loans can be used to buy a lot and build a home on the lot covering costs for both labor and materials. During the construction period, borrowers only pay interest-only payments, so you can save your money for unexpected expenses that pop up during construction.
When the home is ready, a standard mortgage, with a term of up to 30 years, is done to pay off the construction line. Even though there are two loans, doing both loans with Rivers Edge Bank allows you to experience one set of closing costs.
These loans typically require a sizable down payment of at least 20% on the home, so it might not be feasible for homebuyers lacking the funds upfront. We’re happy to discuss if this loan could work for you before any handiwork begins. Ultimately, Rivers Edge Bank wants to help you build the life of your dreams with secure personal finances.
Home Improvement Lines of Credit
Much like a construction loan, a home improvement line-of-credit is opened to fund a renovation project until it is complete and then replaced with a permanent loan. This can be in the form of a refinance of your entire mortgage or be done by putting together a 2nd mortgage loan.
Home Equity Loans (2nd Mortgage)
Home equity loans are essentially a second mortgage, allowing homeowners to use their home's equity as collateral to receive a large lump sum to be put toward one-time expenses, such as home renovations. A home equity loan is an especially sensible solution for home renovations because the loan is reinvested in your home, which can drive up the value. However, borrowers can also use a home equity loan for expensive endeavors like weddings, education, vacations and more, in which tax deductions aren’t available.
The amount of cash you’re eligible for depends on the market value of your home and the amount your currently owe on your first mortgage. Both fixed-rate and balloon options are available and on average, the repayment term is anywhere from 5-20 years. Home equity loans work well for planners who know exactly what they’re putting their money towards, and predictable monthly payments are a plus. If you’re a cautious borrower, certain you will be able to pay off the loan, you will benefit from the stability of a home equity loan.
However, with your home equity at stake, you can’t uproot and move without paying off the loan in full. You risk placing yourself in a tricky situation and potentially losing money in a volatile market if you’re not thinking ahead when you initiate a home equity loan. The Rivers Edge Bank team is ready to help you strategically evaluate whether or not it’s worth the risk.
Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) shares several similarities to a home equity loan, as it also depends on leveraging home equity as collateral. Instead of a lump sum, borrowers receive a revolving line of credit to be used at their convenience, much like a credit card. HELOCs are an easy way to establish an emergency fund as you build up your budget.
Having equity in your home is a huge asset to homeowners, especially when you need quick cash, because a HELOC is there when you need it. Each HELOC has a 5-year term and requires a monthly payment, which consists of 1% of the outstanding principal balance + the accrued interest on the billing date.
HELOCs traditionally have variable interest rates, so monthly payments may vary as the market rises and falls. HELOCs can be a lifesaver when you need access to funds for an extended period of time, so those desiring flexibility might consider moving forward with a HELOC. Ultimately you pay less than you would relying on a typical credit card because your house is secured as collateral, so it’s a logical choice to get a leg up if you can commit to avoiding unessential spending.
What’s the difference between HELOC and Home Equity Loans?
Home Equity Loan vs. Line of Credit
The common denominator when comparing a home equity loan vs. HELOC is the ability to use home equity as collateral to receive funds. The two serve different purposes, with home equity loans best for planned one-time expenses and HELOCs better suited for emergency funds as needed. Other points of comparison include:
| The Differences Between a Home Equity Loan and Home Equity Line of Credit
|Home Equity Loan
| Available as a lump sum
||Available as an open line of credit
| Fixed interest rate for agreed upon term
||Variable interest rate (typically lower than a home equity loan, but susceptible to the market)
| Options to repay loan over terms ranging from 5-20 years*
||Most repayment periods are 5 years*
| Closing costs can be financed as part of the loan
||Closing costs are paid up front
| Consistent monthly payment amounts
||Monthly payment amounts vary with the principal balance and the market
| Best for planners and predictability
||Best for those who need flexibility
* See above product descriptions
While both home equity loans and lines of credit usually require lower monthly payment amounts than other loan types, both are putting your home equity and value at risk, so all pros and cons should be considered before moving forward. We’ll work with you to make the most financially sound decision based on your current situation and needs.