It’s a new housing market, a new lending environment and a new economy. Keeping that in mind, it makes sense that new types of mortgages are popping up all over the place. Some of the innovative new mortgage options that are available to borrowers include:
- The 40-year Mortgage
- The Hybrid Mortgage
- The Mortgage Modification
- The YOURgage
The 40-Year Mortgage
The 40-year mortgage relates to the term – or number of years – that the mortgage is outstanding. In addition, the term of the mortgage indicates how the monthly mortgage payments are amortized.
In short, a 30-year mortgage allows the borrower to amortize their monthly mortgage payments over 30 years. This means that the monthly payments will typically be lower than that of a 15-year mortgage, for example, which has a shorter term. With a 40-year mortgage, the borrower is getting the advantage of having an even longer term on the mortgage so they can spread out their mortgage payments, which also means that the monthly mortgage payments are usually going to be much lower than that of a 30-year or 15-year mortgage.
The Hybrid Mortgage
[Mortgage Help: Get your free credit report and see if your credit score is mortgage qualified]The hybrid mortgage combines the qualities of a fixed rate and adjustable rate mortgage. Generally, a hybrid mortgage offers a fixed interest rate at the beginning of the mortgage – e.g. three, five, seven or 10 years. After the fixed rate period is up, the loan adjusts to a potentially higher rate.
The benefit of this mortgage is that during the fixed rate period, the interest rate is typically lower than a standard 30-year mortgage. Hybrid mortgages are generally best suited for homeowners who only intend on living in the home for the fixed rate period.
The Mortgage Modification
For many homeowners that found themselves underwater on their mortgage or in major financial straits because of the economy, a mortgage modification may be the answer. A mortgage modification permits a borrower to work with their current lender to change or modify the existing terms or conditions of the mortgage. The idea is to make changes that will allow the borrower to continue making timely and affordable mortgage payments, and avoid foreclosure.
Then there are mortgage lenders, such as Quicken Loans, that essentially allow you to create your own mortgage – a mortgage that fits your needs and lifestyle. The YOURgage permits borrowers to choose options such as how much money you want to pay on a monthly basis, how much money you need to pay in order to pay off your mortgage in certain period of time, or if you want to keep the same mortgage term that you currently have (e.g. 8 years, 17 years, 20 years), but want to lower your interest rate. In other words, it’s a build-it-yourself mortgage.
The housing market has struggled. The mortgage and lending markets have struggled. This has forced mortgage lenders to come up with some creative and innovative ways to lend money that will best suit the needs of their clients in this new economy. Not all lenders offer the same options, so be sure to check in with your trusted mortgage expert to find out what loan programs are available to you.