Definitions on Types of Mortgages Part 2

FHA and FHA Mortgages - Federal Housing Administration - established in 1934 to improve housing standards and conditions to help provide an adequate home financing system through insurance of mortgages.

VA Mortgage - A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.

Shared Appreciation Mortgage - Arrangement in which a third-party investor provides a percentage of the buyer’s down payment and retains the same percentage of ownership and appreciation until paid back.

Dual Index Mortgage - probably the easiest way to understand it - the interest rate is adjustable and can periodically rise or deflate depending on the market rate. So the amount of interest earned by the lender is determined by the interest rate index. The amount a borrower has to pay monthly is calculated by the wage and salary index. As wages increase, the borrower will have to pay more per month, and as wages decrease, the borrower will pay less.

Wrap Around Loan - Wrap around mortgage, also called an all inclusive trust deed, is where a new mortgage is placed in a subordinate (secondary) position to the original mortgage and the new mortgage includes the unpaid balance of first. What do I mean? The seller holds onto the existing mortgage - The seller names the property’s selling price - The seller offers the buyer a loan at a higher interest rate than
the existing mortgage - The buyer pays the seller a fixed monthly amount - The seller uses part of this money towards the existing loan.

Only a few more to finish.

Sharon