A conventional balloon mortgage
A conventional balloon mortgage is
a fixed-rate mortgage loan that offers a set interest rate for the first five to seven years of the loan, and an option ( with conditions) to refinance for an additional twenty-three to twenty-five years.
Features of a Conventional Balloon Mortgage
1. The interest rate is generally lower than the rate for a conventional 30-year term fixed rate loan.
2. The lower interest rate and monthly payment are fixed for the first five
to seven years of the loan.
3. After the initial period, the borrower has the option to refinance
the mortgage for an additional twenty-three to twenty-five years at a new fixed interest rate. There is no need to re-qualify if certain conditions specified in the loan documents are met.
4. There is no negative amortization.
5. Purchase or refinance transactions for owner-occupied properties are
eligible.
6. Single-detached homes, townhomes, approved condominium units, units in
planned unit developments and multiple units of up to four living units
are eligible for financing.
7. Mortgage insurance is generally required on all loans with
loan-to-value ratios higher than 80% which means you have to have
20% down if you do not want to pay mortgage insurance.
8. There is no prepayment penalty.
IMPORTANT CONSIDERATIONS FOR APPLICANT
A. The initial interest rate and monthly payments are typically lower than
for a conventional fixed-rate loan.
B. The interest rate and monthly payments are fixed for the first five
to seven years.
C. There is the option to refinance the mortgage for an additional
twenty-three to twenty-five years at current market rates with
no need to re-qualify if certain conditions are met.
ADDITIONAL ADVANTAGES OF A CONVENTIONAL BALLOON LOAN
1. A VARIETY OF BALLOON TERMS ARE AVAILABLE.
2. TEMPORARY INTEREST RATE BUYDOWNS ARE AVAILABLE.
3. ADVANCE APPROVAL IS AVAILABLE TO PROVIDE THE BORROWER WITH CREDIT APPROVAL BEFORE SELECTING A HOME TO PURCHASE.
4. THE RE-LOCK FEATURE IS AVAILABLE TO SWITCH LOAN PROGRAMS OR TO RE-LOCK TO A NEW INTEREST RATE PRIOR TO CLOSING.
5. THE COMFORTER FEATURE IS AVAILABLE TO HAVE THE PAYMENT START OUT AT A LOWER AMOUNT FOR THE NEXT ONE OR TWO YEARS. THE LOAN PAYMENTS ARE THEN FIXED FOR THE REMAINDER OF THE LOAN TERM.
6. MANY INTEREST RATES AND DISCOUNT POINT COMBINATIONS ARE AVAILABLE.
John DeBrito
SOLD Real Estate Company
Phone 719-247-8398
e-mail soldrealestate@comcast.net