A mortgage is not a loan. A mortgage is the security instrument that creates the lien against the real estate. The loan is created by the note, sometimes called the promissory note, A mortgage promissory note is a promise to pay.
Most people prefer a fixed-rate mortgage. But it is also possible to have an adjustable rate mortgage, a bi-weekly mortgage and a balloon mortgage.
You can get a conventional mortgage if you have good credit. This will give you the lowest interest rate.
But if your credit is not so good you can get a sub-prime mortgage. The interest rate is higher with a sub-prime mortgage to compensate the lender for the extra risk they are taking.
An adjustable rate mortgage means the interest rate can go up or down. It is usually fixed to a certain index, like the 10-year treasury bond index plus a certain percentage. Adjustable rate mortgages usually have a cap on the maximum annual increase and the total increase in interest rate possible.
A balloon mortgage is usually calculated as if it was going to amortize over a long period of time, like 30 years. But however, after perhaps 5 or 10 years the entire balance has to be paid off in full.
We recommend using tested, legally binding mortgage documents if you create a mortgage either as an investor or for seller financing. The mortgages below are samples of what such mortgages look like.
The mortgage documents on this site come from the FannieMae website and are
their copyright. They have been electronically converted by us to
htm format and may contain spelling mistakes.
Archived for Educational Purposes only Under U.S.C. Title 17
Section 107 by Mortgage-a.com in May 2004. Go to the Fannie Mae
web site if you wish to see if there is a newer version of any of these forms.
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Ref.
http://www.access.gpo.gov/uscode/title17/chapter1.html
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