Christian Mortgage Balloon Payments
Mortgage balloon payments can help a buyer who plans on selling his property before the mortgage is paid off because the payments and interest are lower throughout most of the loan making up the difference with large installments periodically or as one large installment at the end. The length of a loan having mortgage balloon payments is typically much shorter than a traditional one. A traditional thirty year fixed loan has the same payments every month for the entire term. Adjustable rate options usually mean lower interest and payments initially but then after several years the rate and the payments increase. The increases can occur several times throughout the life of the loan. Other types of mortgage options include interest only and biweekly.
The decision to choose the best type of home loan is mostly up to the borrower. In order to choose wisely the buyer needs to understand what the different options are. Years ago there were only about three choices. There were conventional loans, FHA loans, and VA loans. Today there are many more choices. The best thing that the average consumer can do is to find a lender that can go over the many choices and determine which one will work best. This is largely dependent upon the potential buyer's financial situation and his or her forecasted financial situation. Mortgage balloon payments is a choice that allows the potential buyer to be approved easier, finance with shorter terms, but end up with a large payment at the end of the note.
Making the right choice when it comes to home loans is one that the buyer has to live with at least for awhile. Some people think that an adjustable rate mortgage will work out great until the interest and payments go up and then they try to refinance and convert the ARM to a fixed rate loan. An adjustable rate option can work out well if the interest rates decrease. However, if they increase then the home owner is left with higher installments to make each month. Mortgage balloon payments might be a better choice if the buyer plans to sell or refinance before it is time to make that large balloon payment.
Buyers often assume that their income will increase as time goes by so an ARM or mortgage balloon payments will not be a problem but sometimes things do not work out as expected. Those higher installments might come at a time that the credit cards are all maxed out and the children are in college, or when repairs on the car are necessary. Sometimes a homeowner might not realize that it is time for the payments to go up until it has already happened. Not being prepared financially for an increase could mean getting behind on a lot of other financial obligations. Not planning for the future can result in financial disaster. A potential homeowner should consider all of the different loan choices carefully and then plan for the future carefully to avoid problems. "The time is come, the day draw near: let not the buyer rejoice, nor the seller mourn: for wrath is upon all the multitude thereof" (Ezekiel 7:12).
Sometimes a loan can be set up to automatically reset before the mortgage balloon payments become due. The criteria for meeting this option usually counts on the borrower not having any late payments of up to 30 days past due and no liens against the property. A borrower should understand the terms and conditions of this type of financing before signing the contract. If the contract does not contain a reset option then the homeowner can always refinance if his or her credit is good enough. To refinance many lenders will require closing costs to be paid. The smart way to refinance is to wait until a lower interest rate can be acquired.
Biweekly mortgages are set up where the borrower makes half a monthly payment every two weeks. If the lender applies the installment after receiving it then this can save a person a great deal in interest thus paying off the loan much earlier. Some lenders may not credit all of the money received but once a month. If this is the case then the savings will be lost. A borrower can actually make an installment every two weeks without having a biweekly loan. He or she can just send in a half payment every two weeks without having a prearranged agreement with the lender. Even someone who has to pay mortgage balloon payments can use this method to save money. The main thing to find out before doing this is if the lender has prepayment penalties for paying off the loan early.
Interest only loans allow the buyer to pay the interest only for a set amount of time which means that everything that is paid goes to interest and nothing goes to the principle. This will make the monthly payment lower and that is usually why a buyer will consider this option thus hoping that in a few years he or she will be making more money and can afford the higher payment. This could be considered similar to mortgage balloon payments because installments are lower initially until the balloon payment becomes due. With the many different types of financing options available a potential homeowner should do some research and ask a lot of questions before making a deal because the purchase of a home will probably be the largest single purchase he or she will ever make.
Christian Balloon Payment LoansBalloon payment loans are for those who are optimistic about the future. In a lot of ways, these loans can be likened to someone who has just driven off the ledge of a high mountain road and is plunging through air. He really is enjoying the view and the wonderful breeze, and is hopeful that at the bottom of the mountain there is the universe's largest marshmallow. These lending agreements are also for those who are anxious to have a house way above their income capabilities and who are optimistic that their financial situation will drastically improve in a matter of years. The short version is that balloon payment loans are three days in Las Vegas and a two week hitchhike home for many.
Balloon payment loans are the bank's answer to someone's lust for a very nice house that he has no business buying. The loans come in different types but they all have a bear trap attached. In five or seven years, all of the money for the loan is due. A person gets to have a house that everyone oohs and aahs over and they can feel successful and admired, but it's the "Emperor's New Clothes" all over again. A loan of this type is a fixed rate loan, but the interest rates are a little lower than thirty year fixed rates. Obtaining a loan of this kind may have a higher number of "points" at the beginning however. One point is one percent of the total loan's value so four points on a four hundred thousand dollar lending agreement would be sixteen thousand dollars just for the privilege of getting to borrow money due at the end of seven or five years.
Add those realities to the fact that very little of the lower payments will actually be put on the loan value in those five or seven years and consequently the house can becomes a high cost rental. One of the great pitfalls of balloon payment loans is the real chance buyers take with assuming that money will be as easy to get five or seven years later, but that is a huge assumption. In light of the latest credit crisis and the failure of more banks looming on the horizon, credit may not only cost a lot more than it has in the past but it is guaranteed to be much harder to get. Only pristine credit scores will be considered, and only if the prospective buyer has at least twenty percent of the cost of the house to place on the agreement will there be a chance to secure the loan. Did you know that Jesus Christ never lived His earthly life in order to be called a great teacher or philosopher, or even a revolutionary as some like to say? His one purpose was this: "For the Son of man is come to seek and save that which was lost." (Luke 19:10)
There are usually two types of balloon payment loans available. Both are based on large payments due at the end of the loan period. The first is a five year and the second is a seven year. Both are fixed rates, sometimes based on thirty year amortization and others on fifteen years. At the end of either loan period, the full payment is due and it is time to refinance or move. In many parts of the country, a simple starter home can cost more than three or four hundred thousand dollars. Balloon payment loans, which can actually be lower than even variable rate loans are often the answer for cash strapped homebuyers. With national statistics revealing that most homeowners are usually getting a new mortgage every 2.8 years, and the average length of stay in one house is less than seven years the chances that a balloon payment might ever get to maturity is probably fairly slim. So balloon loans are best for those who don't believe they will be in a house very long; for example, maybe a transfer is looming in the next few years.
In many cases, balloon payment loans are chosen to get more house than one can really afford. But for those who really want to have a higher end house, the jumbo loan would be the answer. Fannie Mae and Freddie Mac, the troubled federal buyers of mortgages, set the conforming loan limit rate each year. This limit rate is the ceiling amount on which these entities will purchase the mortgages, and so beyond that limit (which is four hundred and seventeen thousand dollars) would be a jumbo loan. These may be fixed, variable interest or FHA loans and surprisingly may be up to ninety seven percent of the fair market values of the house. But the years of buying high priced homes may be coming to an end.
Christian balloon payment loans and jumbo loans have been vehicles with which consumers have been able to live excessive lifestyles that were out of the range of their realistic income. The American economy, once the envy of the world, has been based on faux credit availability. These who chose balloon lending agreements five or seven years ago, believing that the good times would be even better in years to come are now going to be hard pressed to get refinancing, particularly if there have been plenty of new credit pressures place on their borrowing histories. Simpler and much less extravagant lives are ahead for most. That isn't a bad thing.