There are many different types of mortgages. Some are designed for the borrower and some are for the lender. Here are four types: secured, non-secured, deferred, and a second mortgage.
Secured loans require the borrower to secure collateral against the loan. The lender holds the right to repossess the property should the borrower default on the loan. The collateral used to secure the loan can be anything from your home to a car.
non-secured loans are not secured against property. The loan is generally unsecured. You will need to put down some money as the lender will typically require at least a certain amount of collateral. If you default on the loan, you will owe all of the balance plus the costs of foreclosure.
Deferred or balloon mortgages are considered bad credit mortgages and therefore have a higher interest rate and are more difficult to obtain. Some lenders will refuse to lend if the debtor has a bad credit rating.
A second mortgage is when you borrow against your personal property, such as a home or car. This is similar to a conventional loan, except that the debt will be repaid after the borrower’s death. A person who has a mortgage on his or her home can use this type of mortgage to pay off his or her existing mortgage.
A no fax mortgage is one where the contract cannot be processed without a fax of all paperwork and documents. You can fax this paperwork directly to the lender and have the loan approved and mailed to you.
Another type of mortgage is the fixed-rate mortgage. These are mortgages that do not fluctuate in value based on the real estate market. This type of mortgage is popular in the UK and is not usually available to those with a bad credit rating.
These mortgages are called cash-out mortgages. This means that the borrower borrows the full amount of the mortgage without having to pay any interest to the lender. This type of mortgage is offered by some lenders.
Equity mortgages are where the money used to purchase the property is put into the property. The property is then repaid to the borrower.
Both FHA (Federal Housing Administration) and VA (Veterans Administration) loans are government-sponsored loans. They allow individuals who are disabled or who are suffering from an accident to receive the money they need to buy a home.
There are many mortgages available and it is up to the lender to decide what type of mortgage is best for an individual’s needs. Many times the homeowner will need a small amount of both home equity and cash. It is wise to go over each of these loans thoroughly before signing the loan papers.