For so many of us, owning a home is an exciting financial milestone. To help you reach your financial goals, we offer several home loan options. Whether your goal is to buy a house, renovate, or borrow against the equity in your home, trust Shore United Bank for a loan you can count on.
If owning a home is on your bucket list, you may be able to check off that box sooner than you think. A residential mortgage loan is one that you receive to buy a house or other residential property (think: condos, townhouses, or vacation homes). This loan is secured by the real estate purchased with the monies received until the principal balance and the interest has been paid, in monthly installments. However, this can vary based on your debt to asset ratio and payment preferences.
Residential 5/5 Adjustable Rate Mortgage (ARM)
A 5/5 adjustable rate mortgage has an initial rate for the first five years and rate adjustments after that once every five years. This allows your payments to rise and fall with the economy, while still allowing you the ability to plan your budget accordingly. All ARMs have caps on them, meaning that your interest rate can only increase by a certain percentage. Our ARM can only increase by up to five percent. Many customers find that ARMs work to their advantage, offering lower interest rates in the short-term, allowing them time to earn more and plan accordingly moving forward.
Our Take on the Residential ARM
At Shore United Bank, we know that accomplishing your financial goals can seem impossible. That’s why we offer competitive mortgage rates and options. With our 5/5 ARM1 your interest rate will stay fixed for the first five years of your loan, and after that, the interest rate will be adjusted to suit the demands of the economy once every five years after that. So, based on a typical 30-year loan, our ARM rates will be adjusted up to five times, with a limit of increasing the interest rate by five percent total during the span of the loan’s lifetime. This option may allow you to have lower payments than a traditional fixed-rate mortgage and locks your interest rates in place for the first 60 months. With our ARM, you can accomplish your financial goals now while planning for the future.
If you want peace of mind knowing that your monthly principal and interest payment will remain the same each month, then our 20-year fixed mortgage loan may be a good option for you.
In addition to locking in your interest rate for the life of the loan, a 20-year fixed mortgage loan can help you pay off your home faster and build equity more quickly than a traditional 30-year mortgage. This benefit makes the 20-year fixed mortgage a good option to consider if you are planning to buy a new home or refinance your existing mortgage loan.
At Shore United Bank, we offer a competitive interest rate of 3.5% with an Annual Percentage Rate (APR) of 3.557%2 for terms up to 20 years for your primary residence. The interest rate is slightly higher for secondary residences, which is currently 3.75% with an APR of 3.807%. The maximum loan to value for primary residences is 80% and secondary residences is 75%. Based on the loan amount borrowed, closing costs will vary and are due at the time of closing.
Construction to Permanent Loans
Whether you want to build a new home or make renovations to your existing home, consider a construction to permanent (CP) loan as a single, convenient loan option that will cover everything you need. This loan type consolidates your closing costs, saving you money in fees. It effectively transitions from a construction loan to a mortgage during the permanent or live-in stage of your home. This means that, as your home is being built, you pay interest only on the amount disbursed. But once you move in, you’ll be able to count on a monthly principal and interest mortgage payment plan.
Most construction loans require that you make two closing payments and separate fees for each type of loan: construction and permanent. Because the typical process for construction loans requires both loan types, you may not have the option of negotiating a locked – or max – mortgage rate upfront. This means that if rates go up during your construction, you may be stuck at the highest rate when you apply for a separate, permanent mortgage loan. Furthermore, construction can be expensive and rarely finishes under-budget. If your project has impacted your financial circumstances, you may find it hard to get approved for a mortgage loan after all is said and done.
Construction–Permanent Loans, The Shore United Bank Way
To save you time and money, we’ve combined the process of getting – and paying for – loans during your residential construction process. You’ll only need to sign one simple modification agreement to effectively transfer the terms of the loan from the construction phase to the permanent phase. During the construction phase, we offer a locked interest, 12-month draw period where interest-only payments are required. After that, you’ll transition to monthly principle and interest payments like any other mortgage loan. Building your dream home shouldn’t be a financial hassle. At Shore United Bank, we’re here to help you accomplish your goals.
Home Equity Loans
If you're thinking about how to pay for your child's college tuition, or making some home improvements, you may be thinking about tapping into your home's equity. Depending on your financial goals, home equity financing can be set up as a fixed term loan or a line of credit. To help determine the right home equity option, you first need to know the different between a home equity loan and a home equity line of credit.
What is the difference between a Home Equity Loan and a Home Equity Line of Credit?
A home equity loan has a fixed interest rate, fixed loan amount and a fixed monthly principal and interest payment, making it easier to factor into your budget. If you know exactly how much money you will need for your financial goal, then a home equity loan is the right option for you!
A home equity line of credit (HELOC) may be the right option for you if you're unsure of how much money you will need for your financial goal and need more flexibility when accessing your equity. A HELOC is a flexible credit option because funds from a HELOC work like a credit card and are available for you to use as you choose. As you pay off the principal, the amount paid goes back to your available credit line. However, because your home is offered as collateral, the interest rate for a HELOC is generally lower than credit card interest rates.
Both loan types draw on the equity in your home for you to use towards the things you want most in life - like taking your dream vacation, buying a new car, or building an addition onto your home.
Shore United Bank Home Equity Loan
Our home equity loan is offered at a fixed rate with term options of 12-180 months. At Shore United Bank, we offer a competitive interest rate of 4.99% with an Annual Percentage Rate (APR) of 4.996%3 for terms up to 15 years for your primary residence. Loan-to-Value requirements can range from 65% - 80%, depending on the loan amount requested and occupancy collateral type. Based on the loan amount borrowed, closing costs will vary and are due at the time of closing.
Shore United Bank HELOC
Our HELOC is offered at a variable rate equal to the highest Prime Rate published in the Wall Street Journal. As a variable interest rate loan, the Annual Percentage Rate (APR) could change as often as daily but will not exceed 24%. As of March 17, 2020, the APR was 3.25%. Subject to credit approval, the amount of your credit line can be up to 80% of your home's value, available on primary or secondary residences only.
With a 10-year draw period, you'll be able to withdraw funds from your total line of credit for up to 10 years. During the draw period you have the option to repay interest-only or principal and interest. The draw period is then followed by a 20-year repayment period with a minimum monthly payment of 0.42% of the principal balance, plus accrued interest or $100 (whichever is greater). What this means is that you'll have the option to use this line of credit for up to 10 years, then take up to 20 years to pay back the principal balance and any accrued interest. According to tax guidelines, paying interest on a HELOC may be considered tax deductible. We encourage you to contact your tax advisor for more information on the tax deductibility of our HELOC.
As with any loan, closing costs should be accounted for. Depending on your loan circumstances, fees and charges associated with HELOCs total between $549.00 and $3,539.00. You will have the option of paying the closing costs at settlement from an initial draw against the line, and you may qualify for a rebate of certain fees. We are happy to provide an itemized statement of fees upon request.
1Adjustable Rate Mortgage (ARM) rates are subject to change every five years during the term of the loan. For example, terms for a $250,000 5-year ARM amortized over 360 months for a single-family primary residence with a down payment of 20% or more would be an initial interest rate of 3.45% effective for 60 months with monthly payment for months 1 – 60 of $1,116.02. Beginning at month 61 and every five years thereafter interest rate would adjust. Based on the current (May 26, 2020) index rate of 3.030% plus a margin of 0.75% the interest rate for months 61 – 360 would be 3.750% and the monthly payment would be $1,152.32. The APR for this loan example would be 3.686%. Payments in this example do not include taxes or insurance. Your payment may be greater.
2The Annual Percentage Rate (APR) is based on the following example. $250,000 loan for a single-family primary residence with a 20% down payment with an interest rate of 3.5% would result in 240 monthly payments of $1,450.27. $250,000 loan for a single-family secondary residence with 20% down payment with an interest rate of 3.75% would result in 240 monthly payments of $1,482.53. Payments do not include taxes or insurance. Your payment may be greater. Borrower must maintain insurance on the property securing credit.
3The Annual Percentage Rate (APR) is based on the following example. $100,000 loan for a single-family primary residence with an interest rate of 4.99% would result in 180 monthly payments of $790.50. Payments do not include taxes or insurance. Your payment may be greater. Borrower must maintain insurance on the property securing credit.
All loans are subject to credit approval, and the borrower must maintain insurance on the property securing credit.