Guide to Refinance, Mortgage,
& Home Equity Loans in
Rapid City, South Dakota (SD)

When you have found a home or live in a home that you own in Rapid City, South Dakota, you will have financial needs that need to be met. Some of these needs are finding a mortgage, refinancing a mortgage or gaining access to the equity in your home with a home equity loan.

A mortgage is money that a lender lends you to help you purchase a home. In return, you pay the lender monthly, bi-weekly or weekly mortgage payments on the principal amount of the mortgage plus interest. Each time you pay your mortgage payment, a certain amount of the payment goes towards the principal of the mortgage, and the rest is interest for the lender. At the start of your mortgage, you will be paying more in interest than on principal, but the ratio of principal to interest increases in your favor over time. The money that is applied to the principal is known as home equity and once you have accumulated an amount of home equity, you can then borrow the money back in a home equity loan.

Mortgages are amortized for the full cost of the house over a period of 15 to 30 years usually. The longer the amortization, the smaller your mortgage payments and the more interest you end up paying to the lender. The mortgages are then set in terms of one to five years. At the end of the term of your mortgage, you can refinance your mortgage with new terms, new interest rate or renew your mortgage with the same lender.

There are some mortgages that allow you to make extra payments to a maximum of a certain percentage of the principal, usually 25 percent in the first year. Making these extra payments will drop the amortization time and, when you refinance, could mean lower monthly payments. There are also mortgages such as the 50-year mortgage that help homeowners pay for more pricey homes in more reasonable payments by extending the amortization another 15 years.

Once you own your home for a while, you have built up home equity and you can get a home equity loan. This means you would borrow the money you have “saved” in your home to use as you see fit. Some lenders will allow you to borrow up to 100 percent of the home equity you have built. You can use this money from the home equity loan in a variety of ways: to finance a college education, to renovate and improve your home, to take a family vacation, or pay off other bills and loans that have higher interest rates.

There are generally two types of home equity loans available: open and closed. An open home equity loans is more of a revolving line of credit with the maximum being the equity in your home that you have borrowed. You can access this money at any time and are required to make minimum monthly payments on the interest that is due. If you pay more than the minimum, then the money is applied back to your home equity and is once again accessible to you. A closed home equity loan only gives you one large lump sum of money, and then you make monthly payments to pay it back. This is also known as a second mortgage and you cannot borrow again from the same loan or the equity in your home until you have paid back the original home equity loan.

There are many financial needs that homeowners have over the course of purchasing and financing a home. Even living life in a home can cost money, especially if you need to do major renovations. This is where products like a cash-out mortgage refinancing loan or a closed home equity loan are helpful options. These products give you the ability to continue to improve your home, pay off bills, or to pay for college tuition by using money that you have saved in your home.

There are a wide variety of mortgages and home equity loans to help you with purchasing a home in Rapid City. Get started by filling out the form below and one of our lenders will get a hold of you soon.