Non-Traditional Mortgage Loans

These loans normally do not have your typical Amortization Schedule & sometimes offers deferral of Principal or Interest. Though these loans are much riskier due to the abnormal terms regarding payments & lower credit score requirements, they are easier to qualify for than your common Conventional Loan.

Loan Types Include:

  • Ballon Payments:
    This loan type is most suitable for ones who will not stay at the property longer than a few years or ones who want lower monthly mortgage payments & can very well afford the lump sum payment when due. The one-time payment (typically towards the end of the loan) covers a substantial amount of the loan. You will either have interest-only payments throughout the life of the loan & make a very large principal payment when it is due OR, make payments that include both principal & interest then have a smaller one-time payment when the Balloon is due.
  • Interest-Only Mortgage Loans:
    This loan type allows for interest-only payments for a set period. Typically for a set number of years & also normally an Adjustable-Rate-Mortgage (ARM); meaning once those set number of years are up, the loan balance will amortize & monthly payments can either increase (significantly) or decrease. When this loan type includes an ARM, interest will adjust a number of times, there are also fixed interest- only mortgage loans, but these are not as common.
  • Payment-Option ARM:
    This Loan type is very risky based on the fact your monthly payments (can decrease) more often than not increase & the amount of debt you owe also increases all while paying your mortgage monthly. This is most suitable normally for ones who plan on staying at property for short period of time (same as mentioned about the Balloon Payment) or ones who know exactly & completely understand what they are getting into & are comfortable with/can afford the monthly payments once loan begins adjusting. There are several adjustment periods & payment options which include: 4, 15, 30 - Year fully amortizing payments. You may either make the minimum payment or pay over the minimum each month 7 as mentioned above you may also make interest-only payments as well.

Summary of Non-Traditional Mortgage Loans:
These are very risky loan programs not only for the lender but for the one who is a borrower on the loan. Before deciding you want to follow through with one of these programs, please not only speak with a licensed professional but also do some research yourself & be positive that it is what you truly want to do.