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Other Types of Mortgages
Besides fixed rate mortgages and adjustable rate mortgages there are many different types of mortgages. Many of these are obscure or specialized loans, but they may be available to you depending on your background. If so, they are definitely worth a look while you decide which mortgage is best for you.
5/25 and 7/23 loans, or two-step loans, are 30 year mortgages that start out as fixed rate mortgages for the first five or seven years, respectively. At the end of that time period, the loan then becomes either a convertible loan or a nonconvertible loan, depending on what was chosen when the mortgage was initiated. A convertible loan remains a fixed rate mortgage, but transfers to the current rate. If the loan is nonconvertible, it becomes an adjustable rate mortgage for the remainder of the loan’s life. The big advantage associated with this type of loan is the decreased risk. If you are thinking of getting an adjustable rate mortgage, but are concerned about rising interest rates, this is the way to go since you have a specific rate locked in for the first few years.
A balloon mortgage can be borrowed for any period of time. There are two varieties of this type loan. The first requires that payments cover both principal and interest on the loan until the loan comes due. The second stipulates that only interest be paid on the loan. Once the loan becomes due, the entire balance of the loan is due.
The VA loan is a specialized type of loan available to qualified veterans. Usually, no down payment is required for these loans. If you think you qualify for this type of mortgage, contact the Department of Veterans Affairs.
Designed for first-time buyers, the graduated-payment mortgage may be the right loan for you. This mortgage is also known as the negative amortization loan since payments start out relatively small and then grow over time. It is assumed that as time progresses, the borrower’s finances will improve, thus making larger payments more realistic.
For more infomation on Mortgages choose from the list below. |
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