Buyer qualifies at first year lower interest which is usually three percent below the rate of the loan. Additional payment goes toward principal. Loan is paid off in twelve to 18 years. These mortgages require minimum down payments, no prepayment penalties, full assumption privileges, easier qualification and various financing packages to mold the loan to the buyer. Veterans can qualify for a Veterans Administration loan.
Loan features low or no down payments, assumability and no prepayment penalties.
Loan is characterized by interest rates that can be adjusted up or down according to an index of a lender's cost of funds. Low initial rates and payments are main selling features of the loan. Some adjustable rate loans are helpful for first-time buyers, but buyer needs to know the questions to ask. Financing with below market interest rates and monthly payments calculated as though the loan will be paid off over a twenty five to thirty year term. The balloon requires that the entire balance be paid off in full after three to five years.