Types of Loans & Mortgages

Purchase Loan

A loan used to finance the purchase of the property that serves as collateral for the loan.

Home Equity Loan

Typically a closed-end loan, which means it provides a fixed amount of money that can be repaid with regular payments over a fixed term.

Home Equity Line of Credit

A type of open-end revolving loan in which borrowers are granted a specific credit limit from which they can draw and pay back as they use it.

Reverse Mortgage

Allows qualified homeowners age 62 or older to convert equity in their home into a monthly cash stream or line of credit.

Refinance Loan

Borrowers can take out a new loan to pay off an existing loan, usually to take advantage of lower interest rates or other more favorable terms.

Package Mortgage

Includes both real estate property and personal property as security for the debt.

Blanket Mortgage

Secures two or more parcels or lots, and usually used to finance new subdivision developments.

Bridge Loan

A loan which covers the gap between the termination of one loan and the beginning of the next. Designed to be temporary and are used most commonly for construction financing.

Wraparound Mortgage

An arrangement which goes around an existing mortgage. The buyer/borrower pays the seller a monthly payment that covers the seller's mortgage payment plus the new mortgage payment. Seller continues to make payments on the original loan.

Construction Loan

A temporary loan to finance the construction of improvements. When construction is complete, the loan is replaced by a permanent amortizing loan, called a takeout loan.

Graduated Payment Mortgage

Allows a borrower to make smaller payments at the beginning of the loan that gradually increase for a predetermined number of years, usually two or three, until they're sufficient to fully amortize the loan.

Participation Loan

Allows the lender to share in the earnings generated by the mortgaged property. In exchange, the lender may charge reduced or no interest on the loan.

Budget Mortgage

The monthly payments on this type of loan include principal and interest as well as 1/12th of the annual property taxes and hazard insurance.

Purchase Money Mortgage

When the seller finances the buyer’s purchase, and the buyer repays the seller directly instead of a bank.