Interest Only Loan
The mechanics of an interest only mortgage loan are simple. For a set period you pay only the interest portion of your monthly payment. At the end of the interest only period, your loan reverts back to its original terms, with the monthly payments adjusted to reflect full amortization over the remaining years of the loan.
You won’t build equity during the interest-only term, but it could help you close on the home you want instead of settling for the home you can afford. Since you’ll be qualified based on the interest-only payment, this type of loan is an effective way to obtain your dream home now and invest the principal portion of your payment elsewhere.
If you need to borrow money, home equity lines may be one useful source of credit. They may provide you with large amounts of cash at relatively low interest rates and possibly provide certain tax advantages unavailable with other kinds of loans. (Check with your tax advisor for details.) If you sell your home, most plans require you to pay off your credit line at that time. In addition, because home equity loans give you relatively easy access to cash, you might find you borrow money more freely.
Damaged Credit – Subprime Mortgage
If you have bad credit, you may not qualify for a conventional loan or low down payment loans offered by FHA and VA. In this case, you may consider a subprime mortgage. Because of the higher risk associated with lending to borrowers that have a poor credit history, subprime loans typically require a larger down payment and a higher interest rate.
Subprime loans are one way for you to get into the home you want at today’s price. If you already own a home, a subprime loan can give you an opportunity to clean up your credit and ultimately refinance into a lower rate. If you have a mortgage, you can look at refinancing more than what you currently owe on the house and get cash back for the equity you already have in the home. This cash out could be used to pay off higher rate credit cards, bankruptcy, foreclosure or collections and liens. It could be a good way to clean up a troubled credit history, save money each month and start rebuilding your credit worthiness.
Whether for a purchase or refinance, subprime loans should typically be used as a short term solution, approximately 2-4 years. During that time, you can work to clean up your credit and qualify or a refinance into a lower risk, lower rate loan. Your debt to income level, employment history, type of property and assets are other factors that are taken into consideration when determining if you qualify for a conventional, government or subprime loan.
Primarily for self employed borrowers, but also available for W-2 employees. This is a credit score driven program. You state your income and your employment has to be verified. You do not have to provide pay stubs or W-2’s.
A second mortgage will place an additional mortgage on your home and gives the borrower access to equity in their home without refinancing their existing first mortgage loan.. Second mortgage money usually is loaned in a lump sum, rather than in a series of advances made available by writing checks on an account. Also, second mortgages usually have fixed interest rates and fixed payment amounts.
Similar to the Stated Income Loan, only you do not have to document your employement or your income. This specialty loan is primarily for self employed, W-2 employee, or a person on a fixed income.