Mortgage Loans : Balloon Loan and Renovation Loan.

Basically there are two types pf mortgage Loans.Below information widely discussed two types of Mortgage Loans.First one Mortgage Loan type is Balloon Mortgage Loans and the Second one Mortgage Loan type is Renovation Mortgage Loan.   

Mortgage Type

Balloon Loan

Key Features

Offers fixed payments for a period of time (usually 5 to 7 years), followed by one large payment, known as a balloon payment, of the remaining loan balance. The amount of the monthly payment is not sufficient to repay the balance during the scheduled term. For example, the payments are based on a 30-year term; however, the loan is due and payable in 5 years.

Customer Benefits

Interest rate is lower than that of a 30-year fixedrate loan.

Home buyer’s Scenario

A popular choice of homebuyers who are certain they will move or refinance in 5 to 7 years.

Mortgage Type

Renovation Loan

Key Features

Finances the purchase of a home and provides the additional funds to improve or renovate it.

Customer Benefits 

The amount of money that can be borrowed is based on the future value of the home after improvement.

Home buyer’s Scenario

Investment-minded homebuyers who can or wish to make higher mortgage payments can build equity faster

Mortgage Type

Renovation Loan (Re Loaded Loan of Mortgage)

Key Features

Offers two types of programs: one that finances the purchase of a newly constructed home and one that finances the actual construction plus the purchase of the finished home.

Customer Benefits 

Loans for new construction may offer options such as an extended rate lock or a bridge loan.

Home buyer’s Scenario

Perfect for a homebuyer looking to purchase a “fixer-upper” or a house that requires remodeling to accommodate family needs.