Though these mortgages are not so common, they may be useful on certain occasions. Some of these loans, however, may not exist or you may find it difficult to obtain them. They have only been mentioned for the sake of completeness.
What are some most common mortgages?
Balloon Loan
A balloon loan typically has a balloon payment, which you must pay in a lump sum. Not common these days, this mortgage option may offer low rates, and thus low monthly payments, for an initial period of time, typically 5, 7 or 10 years.
The borrowers must pay the balance that is due or refinance, if allowed, after this initial period. It is highly recommended that you understand all the conditions and explore other options before going ahead.
What are other low payment mortgage options?
Blanket Loan
A blanket loan can cover several structures that are to be built on one parcel of land. These structures may be occupied by different family members. Since appraisal is usually not possible because of the unavailability of comparable properties in the neighborhood, lenders are generally wary of approving a blanket loan.
Two Step Mortgage
A two step mortgage looks somewhat similar to an adjustable-rate mortgage (ARM), though it is not exactly the same thing. Borrowers can enjoy one interest rate for the first five to seven years and a different interest for the remainder of the term. Unlike an ARM, the rate is not linked to a variable index.
Wrap-Around Mortgage
A wrap-around mortgage is needed when a home with an existing lien is sold in a market condition when the current market rate is more than the rate on existing mortgage. The existing mortgage is paid off and a new mortgage takes it place. The property may not be sold with a wrap-around mortgage if the existing mortgage has a due-on-sale clause.
How to contact a lender to pay off your mortgage early?
Prepayment Penalty Mortgage (PPM)
A prepayment penalty mortgage requires you to pay a penalty for prepayment and partial payment. If your payment exceeds 20% of the original principal balance, then it is generally considered as a partial payment. A PPM will even require you to pay a penalty when you decide to repay the entire loan within a certain time period.
Intermediate Term Mortgage
An intermediate term mortgage refers to a loan that has a stated maturity at the time of purchase. The term can be equal to or less than 20 years.
Portable Mortgage
Introduced in 2003, a portable mortgage is a kind of mortgage that can be moved from one property to another.
Installment Loan
When you have a loan that must be repaid in equal payments, that loan is referred to as an installment loan and the payments are usually termed as installments.