For those who have never needed a loan, starting the process might be intimidating. And even if you’ve applied for loans before, you may be stressed about a new type of loan that you need. Entering unfamiliar financing territory may make you uncomfortable, but Rocky Mountain Bank & Trust can help ease your concerns. Honestly, loans are not as complicated or scary as you might think. A little information plus a great lender to walk you through can make all the difference. At Rocky Mountain Bank & Trust, we will work with you to make the process as seamless as possible. To make it even easier, we’ve provided some information on financing, on the different kinds of loans, and on terminology that will be beneficial for you as you move towards applying for a loan.
With a loan, you can borrow money for something that you may not have the money for upfront, and then pay it off over time. You would make monthly payments on your loan, plus interest, taxes, and other fees, until it is paid off. So, you will be paying for more than just the amount of the product or products… you will also be paying your bank for borrowing their money. This is known as interest. Interest is typically a percentage of your loan, so as time goes on, and the more payments you make, the less you will pay in interest as time goes on.
A loan can give you the opportunity to improve or establish your credit score. As long as you are consistent in making your payments in full each month, your credit score should be positively affected. If you are young, and don’t have a credit history, it may be difficult to get approved for a loan on your own. Consider using a cosigner, and starting off with a loan that is small and relatively easy to pay back. Then, with positive credit standing, it should be easier to be approved for larger loans in the future.
How to Get a Loan
There are different kinds of loans for the various needs that people have. Whether your goal is to buy a home, build a house, finance your business or any other situation that requires a significant amount of money… loans can help you get what you need, affordably.
If you can realistically fit a monthly loan payment for what you need into your budget, then you could apply through your bank. A lender will help to make this process easy. You’ll let him know what you want to borrow money for, and he will help to explain all the details and try to get you approved. Depending on your situation, and what kind of loan you need, you may be approved for a loan instantly… or you may have to go through a longer process. If you can’t get approved, ask the lender why, and work towards making those concerns obsolete. Then, you could try again at a later date.
Benefits of a Loan
The most significant benefit of loans is that you can finance those necessary expenses in life—without needing to save up for months or years to buy what you need. Another benefit of loans is if you pay them off faithfully, your credit score will be positively impacted. And the better your credit score, the better your chances are for a low interest rate and approval for other, future loans. Lenders want to loan money to people who are consistent in making payments, therefore they are more likely reward that behavior (and earn your business) with low interest rates. And with low interest rates, you’re left with more money in your wallet. There are many different types of loans designed to help people purchase what they need. Speak with a Rocky Mountain Bank & Trust representative to help you determine what type of loan would work best for you.
Mortgage Loans/Home Loans
Owning your own home is typically a wise financial decision. Over time, your property value may increase, you will receive tax benefits, and you could solidify your credit history. But buying a home is also an incredible commitment, and it helps to know some basics before you consider diving headfirst into the home loan process.
Keep in mind that, with a home loan, you will be paying for more than just the home. Remember to consider taxes, insurance, and interest, as these together will add quite a bit to your costs. To lower your interest rate, you may be able to purchase what are called “discount points”. You would need to meet certain qualifications for discount points, so ask your lender for details.
Interest rates can be adjustable or fixed. With an adjustable rate mortgage, your interest would change over time based on the market—it could either increase or decrease. With a fixed-rate mortgage, your rate is locked in through the entirety of your loan, unless you choose to refinance.
The following are a few of the factors that will be considered for your mortgage application: income, debts, payment habits, credit history, the property, and your ability to make a down payment. A typical mortgage term is 30 years, but shorter or even longer terms may be available. However, you should be able to pay more on your home loan any time you choose, with no penalty. Still, it would be a good idea to check with your lender in regards to your particular situation.
Home Construction Loans
Home construction loans may finance the building of a new house. Before being approved for this kind of loan, your lender will need details on construction plans and your home’s completion timeframe. You will need to provide a significant amount of information, as the budget and project might not go exactly according to plan (as is with most construction projects).
Home construction loans are short-term loans that typically last 12-months. While your home is being built, you will need to make interest-only payments until completion. The money from the loan will be paid out to the builder in lump sums as the work progresses on your home. Once your home is completed, you will need to switch to a traditional mortgage. We can make this process easy by converting your construction loan into a home loan.
If you are interested in buying land, and don’t have plans to build on it just yet, you may consider a lot loan. This type of financing typically has 10-15 year terms, and you will need to let your lender know about your plans for the property. If you choose to build on your lot in the future, we can easily roll your existing lot loan into a home construction loan.
Refinancing is usually reserved for home loans, and is typically done so the borrower can save money. Refinancing can be described as paying off an existing loan and replacing it with a new loan under different terms. Typically, this is done when the average interest rates have dropped, and savings are likely to be achieved through refinancing. More and more people are choosing to refinance with lower interest rates as this could enable them to pay off their debts faster, and save money while doing so.
People also choose to refinance from an adjustable-rate mortgage to a fixed-rate mortgage. It’s scary when rates begin to rise, and you don’t know where they’ll stop. The stability of a fixed-rate mortgage has many people refinancing for this purpose. But sometimes, people will get cash-out refinances. This means that they would refinance for more than they owe on their homes, and take the money to spend or pay off other debts.
Unsecured vs. Secured Loans
Unsecured loans, sometimes called “signature loans”, are given to the borrower on good faith (and legal obligation) that he or she will pay back the loan. There is no property to seize should the borrower not follow through on the deal. The penalties for not paying on an unsecured loan can be higher interest rates, heavy fees, and damaged credit. Unsecured loans may include credit cards and personal loans. Secured loans are given to the borrower with collateral attached to them. For example, a home or car could be seized if the borrower defaults on the loan.
Loans through Rocky Mountain Bank and Trust
You’ll probably find yourself in need of one or more loans in your lifetime. And we will be here to help you every step of the way. Our loan officers will walk you through the process, eliminate any confusion, answer your questions, and make the process as simple and stress-free as possible. You can count on us to walk you through any loan you may need, and make the experience as simple as possible.