When buying a home in the past, there were not many ways to borrow money. These days, there are a lot of different kinds of mortgage loans that can meet almost any borrowing need.
Mortgages with a twist
Getting a loan to buy a house can be a lot of trouble. What if you don't make the grade? How bad will it make you feel? There's nothing to worry about these days. The market for mortgage loans has something for almost everyone.
- Sharing gratitude - Shared gratitude Usually, private investors or even family members give out mortgages. In essence, when you borrow money to buy a home, you agree to "share" with the lender a portion of the home's future value growth. Private lenders can ask for up to 50% of the increase in value, but they will lower the interest rate on the loan by a large amount. SAMs should only be used if your credit is bad and you have no other options.
- Graduated Payments: A loan with a graduated payment plan is called a "Graduated Payment Mortgage." Depending on the lender, your mortgage payments for the first five to seven years will be 10 to 20 percent less than with a fixed-rate mortgage. After the set amount of time, the payments will be higher than they would be with a fixed-rate loan. Two things are good about this loan. First, you can borrow more money than with a fixed loan because you can get lower payments at first. Second, the loan is best if you plan to sell the house within the first five years after it has gone up in value a lot.
- Try the Two Step. The Two-Step Mortgage is a loan with more than one interest rate. The loan basically gives you a lower fixed interest rate for about 5 years, and then at the end of that time, the rate changes to a new one. The new rate will depend on the current interest rates at the time the rate is changed. This loan can help people who are having trouble getting a loan because the interest rate for the first part of the loan is usually lower than for a straight fixed interest loan.
When it comes to mortgages, these three types of loans are just the tip of the iceberg. If you need to think outside the box, find a good mortgage broker in your area and ask them what they can do for you.
