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Mortgage Loan Options – Going Exotic
By: Dave Lewis
In the past, a person had limited options when borrowing money for a home
purchase. These days, there are exotic mortgage loan options that satisfy just
about every borrowing need.
Creative Mortgages
Getting a loan for a home purchase can be very stressful. What if you don’t
qualify? How humiliated will you be? These days, there’s no reason to worry. The
mortgage lending market has a solution for just about everyone.
1. Do the Two Step. The Two-Step Mortgage is a mixed interest rate loan.
Essentially, the loan provides a lower fixed interest rate for a period of 5
years or so and then adjusts to a new rate at the end of the period. The new
rate is dependent upon the interest rates being charged at the time of the
change. This loan can be helpful for borrowers who are squeezing into a loan
since the initial period tends to have a lower interest rate than a straight
fixed interest loan.
2. Graduated Payments – Graduated Payment Mortgages are loans that, well, have a
graduated payment schedule. Depending on the specific lender, the first five to
seven years of mortgage payments will be 10 to 20 percent lower than a fixed
rate mortgage. After the prescribed time, the payments will actually be higher
than a fixed rate loan. The advantage of this loan is two fold. First, it lets
you borrow more money than a fixed loan because you can qualify for the lower
initial payments. Second, the loan is optimal if you are expecting to sell the
house within the initial five-year period after significant appreciation.
3. Sharing Appreciation – Shared Appreciation Mortgages are typically provided
by private investors and even family members. In essence, you borrow money to
purchase a home by agreeing to “share” a percentage of future appreciation in
the home with the lender. Private lenders can want as much as fifty percent of
the appreciation, but they will significantly lower the interest rate on the
loans. SAMs should really only be used if you have horrible credit and no other
options.
There three loan options are only the tip of the iceberg when it comes to
mortgages. If you need to get creative, find a reputable mortgage broker in your
area and see what they can come up with for you.
About the Author:
Dan Lewis is a mortgage broker with http://www.gwhomeloans.com - San Diego
mortgage brokers providing home loans and refinances. Visit http://www.gwhomeloans.com/services.html
to learn more about options for San Diego mortgages.
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