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Assumption
The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing cost and new, probably higher, market-rate interest charges will apply. |
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Debt Consolidation Loan
A type of loan that allows the borrower to payoff all or a portion of existing debt (including the existing mortgage loan) from loan proceeds. |
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Interest-only payments
Mortgage payments that include only interest. No loan amortization occurs and, thus, the homeowner does not accrue any equity (unless the home value increases). |
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Refinancing
The process of paying off one loan with the proceeds from a new loan secured by the same property. The main reasons for refinancing is to better the borrower with a lower interest rates, loan term reduction, switch to or from a fixed or ARM loan, receive cash out, debt consolidation, or to eliminate a balloon payment. |
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