Trendy Mortgage Refinancing And Second Mortgage Programs A Brief Review

Trendy Mortgage Refinancing And Second Mortgage Programs A Brief Review



Trendy Mortgage Refinancing and Second Mortgage Programs: a​ Brief Review
The combination of​ rising interest rates (although still historically low) and rising home prices has caused the​ robust mortgage market to​ slow from its record pace .​
This has motivated lenders to​ either introduce creative new loan products or​ to​ more aggressively market existing products .​
If you​ have not shopped for a​ in​ a​ while,​ you​ will find numerous new products from which to​ choose .​
Following is​ a​ brief review of​ some of​ the​ new and popular products available today.
Interest Only – With this loan program you​ are paying only the​ interest on​ your mortgage and are not paying any principal .​
This reduces your monthly payments and can allow you​ to​ afford a​ larger home or​ save more money on​ a​ mortgage refinancing or​ home purchase loan .​
If used carefully,​ you​ can also free up cash flow that can be used for investment purposes or​ to​ pay down high interest rate debt.
Negative Amortization – These are often marketed using the​ phrase option arm or​ choice mortgage .​
With this loan type,​ your payment does not cover all of​ the​ monthly interest .​
Often,​ your mortgage balance is​ increasing and the​ underlying interest rate is​ usually a​ monthly variable rate .​
These loans are used to​ dramatically reduce your monthly payment and can be used for a​ mortgage refinancing or​ home purchase .​
This program should be reserved for the​ more sophisticated borrower and it​ is​ important that you​ understand the​ terms of​ the​ loan.
40 Year Amortization – Rather than paying off in​ 30 years,​ this loan pays off in​ 40 years .​
as​ with the​ Negative Amortization and Interest Only,​ this program is​ used to​ reduce your monthly payment.
Stated Income / Reduced Income Documentation Loans – There are a​ variety of​ these loan products available,​ but they are primarily used to​ for individuals with difficult to​ verify income .​
These can be used for mortgage refinancing,​ second mortgages and home purchase loans .​
as​ lenders have become more comfortable with credit scoring,​ these products have become very popular .​
Essentially the​ lender is​ relying on​ the​ credit score for their loan decision .​
They realize that borrowers with higher credit scores will pay their mortgage and they do not need to​ fully verify their income.
ALT a​ Programs – the​ ALT is​ short for Alternative and the​ a​ refers to​ the​ borrower category .​
These are categories of​ mortgages that fall outside the​ more stringent guidelines of​ Fannie Mae and Freddie Mac .​
Generally these mortgage refinancing programs allow for more flexibility with regards to​ loan to​ values and income documentation requirements and can be used for home purchase,​ mortgage refinancing and second mortgages.
Hybrid Second Mortgages – Traditionally,​ your options for a​ second mortgage were either a​ fixed rate,​ fixed term loan or​ a​ variable rate,​ open ended line of​ credit .​
Now,​ you​ can have the​ benefit of​ both .​
you​ can start your second mortgage as​ a​ variable rate home equity line of​ credit and then lock in​ all or​ a​ portion of​ it​ to​ a​ fixed rate for a​ fixed number of​ years.




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