Mortgage Definitions

Jumbo mortgage

This is regarded as a nonconforming loan because it exceeds the loan limit set by Fannie Mae and Freddie Mac. The 2003 single-family loan limit is $322,700. The maximum loan amount is 50 percent higher in Alaska, Hawaii and the U.S. Virgin Islands.

Balloon mortgage

With these, borrowers get lower rates and payments for a selected time frame, which typically is anywhere from three years to 10 years. At that point, a borrower has to pay off the principal balance in a lump sum.

Assumable mortgage

Assumable mortgages are relatively rare. a home-owner with an assumable loan can ” hand off” the loan to a buyer rather than paying it off using proceeds from the home sale. If rates are low and you’ll get one, by all means accomplish that. If rates rise, buyers should want to assume your loan (and may be willing to pay more to your house!) because it’ll be much cheaper than any loan they may get from a bank or other source.

Subprime mortgages

These loans have higher rates and more onerous terms than conventional loans, but they will help borrowers who have horrible credit ratings.