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In addition to fixed rate and adjustable rate mortgages, you should be aware of several other types of mortgages, including:
- Seller Financing
These are loans that exceed the loan limits set by corporations who buy mortgage loans from lenders. This is a good loan to get if you need more than the limit allows, but it comes with a much higher interest rate.
These mortgages are a combination of fixed rate and adjustable rate mortgages. They usually begin with a fixed-interest rate followed by an adjustment, which leads to a new fixed-rate for the rest of the loan period. These loans are advantageous for those with bad credit.
These are loans that can be given to a buyer or assumed by a buyer. They reduce monthly payments and allow you to save on closing costs. However, sellers with these types of mortgages tend to charge more for their houses, forcing buyers to gather more money to make up the difference between the loan balance and the sale price of the house.
These are beneficial loans for people with bad credit because they provide people with money and high interest rates. However, they also come with more burdensome terms. The rates and terms vary significantly, so people considering this type of mortgage should shop around to different financial institutions.
These loans are a variance on the standard fixed-rate mortgage. They provide you with a budget-efficient tool by cutting down on the length of time it takes to pay the loan off. However, if financial difficulties arise, it can really put you in a bind because the payments tend to be very close together, usually every two weeks rather than once a month.
These are great loans for people who have short-term plans for the property they’re buying. They come with lower rates and lower payments and require a lump sum payment to cover the balance at the end of the loan term. If your short-term plans change to longer-term following the acquisition of a balloon mortgage, it is normally possible to refinance or convert to a fixed-rate or adjustable-rate mortgage.
These are loans suited to people interested in having a home built for them rather than purchasing an already existing home. They come with higher rates at the beginning, but they become more like a fixed-rate mortgage once the building is completed.
This is a contract between the buyer and the seller without the assistance of a bank. The seller lends the purchase money to the buyer, which the buyer pays back monthly. The property acts as collateral. Sometimes, this type of funding is accompanied by an assumable mortgage.
Should I Consult a Lawyer About My Mortgage Issues?
Buying and financing a piece of real estate can be one of the most burdensome financial endeavors you pursue. A real estate attorney can advise you of the different mortgage financing options. An attorney can also review any financial documents and advise you about your obligations and the best way to proceed.
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Last Modified: 01-27-2014 03:19 PM PST
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