About ING Direct USA
ING Direct isn't a traditional "bricks and mortar" bank. This now-global bank was founded in 1997 in Canada and offers many innovative, online services to its customers. These services include, but are not limited to: mortgages, mortgage refinancing, home equity loans, saving account and checking accounts, all at rates that seem impossible, but are made possible by the lack of actual bank branches. In additional to online banking, ING customers can use its services by phone or mail. The company's U.S. subidiary, ING Direct USA, was sold to Capital One Financial Corporation in June 2011 as the result of a restructuring agreement between ING Group and the European Commission. This article focuses on ING Direct USA.
A Different Approach to Mortgages
One of the things that has made ING Direct popular among many borrowers is that they do not charge lender origination fees or points on their mortgages. This reduces closing costs to the borrower and, since such fees are often rolled into the mortgage itself, may help to keep payments down. ING Direct is unusual in the American market in that it focuses on adjustable-rate mortgages (ARMs). This allows borrowers to obtain lower interest rates than on a standard fixed-rate mortgage, but with rates that will likely change over time. ING’s Easy Orange mortgage is described as a fixed-rate mortgage, but the rate is fixed for only the first five or 10 years of the loan. After that, the borrower can lock in a new rate for another five or 10 years, based on current market conditions. A fee equal to two bi-weekly payments is charged to lock in a new rate. The Easy Orange mortgage features biweekly payments, rather than monthly. The result is the borrower makes the equivalent of 13 monthly payments during the year and pays the mortgage principle down more quickly than on a standard fixed-rate mortgage. The loan is designed to amortize over 30 years. Another product, the Orange Mortgage, is an adjustable-rate mortgage with an initial period of five or seven years. After that period, the borrower may lock in a new rate, based on market conditions, for another five to seven years.
ING provides consumers with attractive refinance options, along with helpful tips and tools that help determine if refinancing is the right option. Rates and mortgage programs are similar to those for home purchases. ING Direct refinance programs include options that allow for debt consolidation, loan term reduction and cash-out refinancing. Because of the way ING mortgage loans are structured (see above), this can enable borrowers to obtain a significantly lower rate than they might be able to obtain from a traditional bricks-and-mortar lender.
Home Equity Loans/HELOCs
All ING Direct USA Home Equity Loans start out as a home equity line of credit (HELOC). Since HELOC rates are lower than standard home equity loans, this enables borrowers to keep their initial rate low. You can borrow as much or as little of your preset credit limit as you wish, when you need it, and only pay interest on what you borrow. HELOC credit limits may utilize up to 75 percent of your home equity, to a maximum of $250,000. ING Direct USA initially charges a variable interest rate on HELOC loan balances. At any point within the first 10 years, the borrower may request to have the balance owed converted to a fixed rate at no additional charge, thereby locking in a fixed payment and rate for paying off the loan. Borrowers can make interest-only payments during the first 10 years of their ING HELOC, after which it converts to a fixed-rate loan payable over 15 years. ING Direct USA does not charge fees for use or maintenance of the HELOC, and there are no penalties for paying the balance off ahead of schedule.