INTERMEDIATE FIXED MORTGAGES Bryan VogtThese are a family of 20 or 30 year loans that are fixed for a set amount of time, such as 5 to 7 years, then they readjust once for the remainder of the loan. This readjustment is based on a predetermined index. Some may refer to these as "balloon" mortgages,but this term is falling out of favor because of the negative connotations associated with the balloon mortgages of the past which were fixed for 5-7 years, at which time the entire balance of the loan became due.
Today, they are more commonly known as intermediate fixed loans or extended balloon mortgages. Some of these loans are not for the faint hearted. You enjoy the fixed payments from one to seven years,and then the loan readjusts,as long as certain conditions are met, such as interest rates have not risen more than five percentage points, you haven't made any late payments in the previous twelve months, etc. If conditions are not met, there are no guarantees, so beware. It is best to consult your Realtor or loan officer if you have questions regarding these loans.
If you are a first time home buyer who plans to trade up before the loan comes due, you might want to consider a balloon mortgage in order to have lower monthly payments. Be sure to get all stipulations in writing and review them carefully. There is a family of intermediate loans that are similar to these balloon mortgages, but when they become due after 5 to 7 years, they adjust and become variable rate loans. They also do not carry the rigid stipulations that balloon loans carry, making them a little easier to live with if you move before the loan is due.
There are various other loan types including roll-overs, wraparounds, zero interest rate mortgages and buy downs, but the ones I have listed here are most common. If you decided to opt for something more exotic. discuss it with your Realtor and loan officer carefully to make sure you know what you are getting yourself into. If you get in over your head and can't meet your obligations, you could end up losing your home and doing serious damage to your credit.
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
---
O'Fallon IL Real Estate, Condos, Homes for SaleSwansea IL Real Estate, Condos, Homes for SaleBellville IL Real Estate, Condos, Homes for SaleScott AFB PCS Relocation---
# posted by
Bryan Vogt @ 1:19 PM
