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2nd Mortgage Terminology

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2nd Mortgage These loans offer a means to borrow against equity in your home without opening a home equity line of credit. These loans usually offer fixed interest rates and a set monthly payment amount. Interest rates on second mortgages are typically higher than traditional mortgages but much lower than home equity loans.

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Adjustable Interest Rate Mortgage These mortgages have interest rates that are periodically adjusted to the current market interest rates. This occurs at regular pre determined time periods. Adjustable Rate Mortgages (ARM) often have lower payments and greater flexibility than fixed interest rate mortgages.

Balloon Mortgages These loans have fixed payment mounts for a specified time. At the end of the loan tern the remaining balance is due in one payment.

Fixed Interest Rate Mortgages The interest rate is unchanged for the duration of the mortgage loan, often 15 to 30 years. Your fixed interest rate does not increase regardless of changes in market interest rates. This mortgage is great for homeowners on a budget or those with low risk tolerance; with a fixed rate mortgage you will always know what your monthly payments are.

Graduated Payment Mortgage These loans start with lower monthly payments that gradually increase over the term of the mortgage loan.

Interest Only Mortgage These mortgages offer interest only payments for a specified term. This results in a much lower monthly payment. The downside is no principal is being paid on the mortgage. When the principal becomes due the monthly payment will increase dramatically.

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