Trendy Indiana Mortgage Refinancing and Second Mortgage
Programs: A Brief Review
The combination of rising interest rates (although still
historically low) and rising home prices has caused the robust
mortgage market to slow from its record pace. This has motivated
Indiana lenders to either introduce creative new loan products
or to more aggressively market existing products. If you have
not shopped for a in a while, you will find numerous new
products from which to choose. Following is a brief review of
some of the new and popular products available today.
Interest Only - With this loan program you are paying only the
interest on your Indiana mortgage and are not paying any
principal. This reduces your monthly payments and can allow you
to afford a larger home or save more money on a mortgage
refinancing or home purchase loan. If used carefully, you can
also free up cash flow that can be used for investment purposes
or to pay down high interest rate debt.
Negative Amortization - These are often marketed using the
phrase "option arm" or "choice mortgage". With this loan type,
your payment does not cover all of the monthly interest. Often,
your mortgage balance is increasing and the underlying interest
rate is usually a monthly variable rate. These loans are used to
dramatically reduce your monthly payment and can be used for an
Indiana mortgage refinancing or home purchase. This program
should be reserved for the more sophisticated borrower and it is
important that you understand the terms of the loan. Click here
for more information about Indiana
Mortgage Refinancing and Indiana Second Mortgage Solutions.
40 Year Amortization - Rather than paying off in 30 years, this
loan pays off in 40 years. As with the Negative Amortization and
Interest Only, this program is used to reduce your monthly
payment.
Stated Income / Reduced Income Documentation Loans - There are a
variety of these loan products available, but they are primarily
used to for individuals with difficult to verify income. These
can be used for Indiana
Mortgage Refinancing, Indiana Second Mortgages and Home Purchase
Loans. As lenders have become more comfortable with credit
scoring, these products have become very popular. Essentially
the lender is relying on the credit score for their loan
decision. They realize that borrowers with higher credit scores
will pay their mortgage and they do not need to fully verify
their income.
ALT A Programs - The "ALT" is short for Alternative and the "A"
refers to the borrower category. These are categories of
mortgages that fall outside the more stringent guidelines of
Fannie Mae and Freddie Mac. Generally these mortgage refinancing
programs allow for more flexibility with regards to loan to
values and income documentation requirements and can be used for
home purchase, mortgage refinancing and second mortgages.
Hybrid Second Mortgages - Traditionally, your options for an
Indiana second mortgage were either a fixed rate, fixed term
loan or a variable rate, open ended line of credit. Now, you can
have the benefit of both. You can start your second mortgage as
a variable rate home equity line of credit and then lock in all
or a portion of it to a fixed rate for a fixed number of years.