Here is a debrief of mortgages to help you understand your options:
Assumable Mortgage: The assumable mortgage is an alternative to this traditional technique. With an assumable mortgage, the home buyer has the ability to take over the existing mortgage of the seller as long as the lender of that mortgage approves.
Adjustable Rate Mortgage: A a mortgage whose rate of interest is adjusted periodically to reflect market conditions.
FHA Loan: An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.
Interest Only Mortgage: The borrower only pays the interest on the mortgage through monthly payments for a term that is fixed on an interest-only mortgage loan. The term is usually between 5 and 7 years. After the term is over, many refinance their homes, make a lump sum payment, or they begin paying off the principal of the loan.
Balloon Mortgage: A balloon payment mortgage is a mortgage which does not fully amortize over the term of the note, thus leaving a balance due at maturity. The final payment is called a balloon payment because of its large size. Balloon payment mortgages are more common in commercial real estate than in residential real estate.
Reverse Mortgage: A Reverse Mortgage or Home Equity Conversion Mortgage (HECM) is a special type of home loan for older homeowners that requires no monthly mortgage payments. Borrowers are still responsible for property taxes and homeowner’s insurance. Reverse mortgages allow elders to access the home equity they have built up in their homes now, and defer payment of the loan until they die, sell, or move out of the home. Because there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance each month. The rising loan balance can eventually grow to exceed the value of the home, particularly in times of declining home values or if the borrower continues to live in the home for many years. However, the borrower (or the borrower’s estate) is generally not required to repay any additional loan balance in excess of the value of the home. Specific rules for reverse mortgage transactions vary depending on the laws of the jurisdiction.
Fixed Rate Mortgage: This is a fully amortizing mortgage loan where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or “float”. As a result, payment amounts and the duration of the loan are fixed and the person who is responsible for paying back the loan benefits from a consistent, single payment and the ability to plan a budget based on this fixed cost.
Give me a callToll Free: (866) 962-0283 or email to determine the best mortgage for you!
Randy Orchen, Mortgage Banker