Most homebuyers-whether a first time purchaser or a veteran trading up for a more suitable home-have one goal in mind: Get the house. To that end, they’ll often take a mortgage loan offer that’s less than ideal. While it’s best to get the loan you want initially, one type of mortgage loan makes getting the loan you need now and readjusting in the future easier. It’s called a convertible loan.
Convertible loans are just what the name suggests: a loan that can be converted from one type of loan to the other. More specifically, convertible loans can be change from an adjustable rate mortgage (ARM) loan to a fixed rate loan. The loan, because of its convertibility, is highly appealing to those who are on a tight budget and are willing to take the risk of an ARM to secure a low interest mortgage loan. The borrower can use the initial period of the loan to get their finances better organized. Then, when a fixed loan offer with a manageable interest rate becomes available, the borrower can switch to a fixed rate loan.
Convertible loans are a fairly new loan product, especially when compared to traditional refinance loans. Though classic refinance loans will always have a place and purpose in the real estate industry, convertible loans do have one main advantage over refinance loan that’s helping them to gain popularity: The cost to switch a convertible loan from an ARM to a fixed rate loan is significantly less than going through a traditional refinance to accomplish the same goal. Consult a mortgage professional to see which type of mortgage loan is best for you.
By: Mauricio Navarro
Posts Tagged ‘Loan Product’
Low Cost Refinancing Through Convertible Loans
March 10th, 2010Georgia Refinance Loans With Bad Credit in Atlanta, Savannah, Augusta, Athens, Columbus, Macon, etc
December 23rd, 2009
Homes in Atlanta, Savannah, Athens and surrounding areas have appreciated to allow homeowners to take cash out of their homes, via home equity loans or home equity line of credit loans, to finance home improvement projects, credit card debt consolidation, education, etc.
If you live in Georgia and you need a mortgage refinance loan but you are worried about bad credit – know that it is possible to get a HELOC or Home Equity Loan, even with a low credit score be it 450, 500 or 550.
What is your FICO credit score?
Your FICO (Fair Isaac Corporation) score is number between 300 and 850, that indicates your financial health. A good FICO score is a score above 670, while a poor FICO score is a score below 620. Different lenders vary of what they consider a “fair” credit score versus a “poor credit score” – this
can be a gray line.
Having a good credit score allows you to get credit on competitive terms – good interest rates, exciting new loan products, credit cards, etc.
If you have a low credit score below 600, you will need to find a subprime refinance lender, who works with people with bad credit, whether it is due to poor debt management or a history of Chapter 7 or Chapter 13 bankruptcy.
Not all subprime lenders are created equal. The best lender is a lender, who is willing to look at your specific situation and find you the best loan product. Even though, you may have a low credit score, you may also have good equity in your home. Some lenders even offer up to 125% LTV (Loan-to-value) loans, if you qualify.
By: Alexandra French