A mortgage loan or Deed of Trust which allows the lender to periodically adjust the interest rate in accordance with a specified index.
A balloon payment is due on a mortgage that usually offers a low monthly payment for an initial period of time. After that period of time elapses, the balance must be paid by the borrower or the amount must be refinanced. The large sum payable at the end of the loan term is called the “balloon payment.”
A short-term, interim loan for financing the cost of construction; the lender advances funds to the builder at periodic interval as work progresses.
A private sector loan which is not guaranteed or insured by the U.S. government.
A mortgage with an interest rate that does not change over the life of the loan, and as a result, monthly payments for principal and interest do not change.
These loans are a mix or a hybrid of a fixed-rate period and an adjustable-rate period. For example, a 3/1 ARM will have a fixed interest rate for the first three years and then will adjust annually until the loan is paid off. The first number tells you how long the fixed interest-rate period will be and the second number tells you how often it will adjust after the initial period.
Interest Only ARMs
An interest-only (I-O) ARM payment plan allows you to pay only the interest for a specific number of years, typically between 3 and 10 years. This allows you to have smaller payments for a period of time. After that, your monthly payments will increase, even if the interest rate stays the same, because you must start paying back the principal as well as the interest each month.