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Types of Loans

Thirty-Year Fixed-Rate Mortgage
The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable-rate loans. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.

Twenty Five-Year Fixed-Rate Mortgage
This loan is fully amortized over a 25-year period and features constant monthly payments. It offers all the advantages of the 30-year loan. The disadvantage is that, with a 25-year loan, you commit to a slightly higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan sooner. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that great.

Twenty-Year Fixed-Rate Mortgage
This loan is fully amortized over a 20-year period and features constant monthly payments. It offers all the advantages of the 30-year loan. The disadvantage is that, with a 20-year loan, you commit to a slightly higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan sooner. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that great.

Fifteen-Year Fixed-Rate Mortgage
This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you'll own your home twice as fast. The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment.

Ten-Year Fixed-Rate Mortgage
This loan is fully amortized over a 10-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you'll own your home much sooner. The disadvantage is that, with a 10-year loan, you commit to a higher monthly payment.

Adjustable Rate Mortgages (ARM)
With an ARM loan you have fixed payments for a set period of time and then your interest rate and payment can change. Because of this the initial interest rate is normally lower than the 30-year fixed rate. There is risk however that when your interest rate adjusts you could have a higher payment. The most important feature of an ARM loan is that your interest rate and monthly payments may substantially change during the life of your loan. Your monthly payments will increase if the interest rate rises and decrease if it falls.

Iowa Finance Authority

Iowa Finance Authority (IFA)
The Iowa Finance Authority strives to assist Iowans by preserving affordable housing and promoting economic development. Learn more about the home ownership programs and financing options available from the Iowa Finance Authority at iowafinanceauthority.gov/en/for_home_buyers.

 

USDA Rural Development Loan Assistance USDA Rural Development Loan Assistance
The United States Department of Agriculture has developed programs to improve the economy and quality of life in all of rural America. Learn more about financial programs designed to assist with housing needs for citizens that live in rural communities by visiting rurdev.usda.gov/HAD-HCFPLoans.html.

 

Hills Bank and Trust Company
131 Main Street, Hills, IA  52235
Toll Free:  (866) 551-4585
homeloancenter@hillsbank.com
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