A short term interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as the work progresses.
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance.
Mortgage payments that include only interest. No loan amortization occurs and, thus, the homeowner does not accrue any equity (unless the home value increases).
|Private Mortgage Insurance (PMI)|
In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 3 percent in some cases. With down payments below 20%, borrowers are usually required to carry private mortgage insurance depending on your loan's structure. Private Mortgage Insurance, is paid on all non-government-insured loans and whose equity is less than 20%. When you have accumulated 20% in equity, your lender may waive PMI at your request. FHA and VA loans have different insurance and guidelines; see Mortgage Insurance Premium for FHA loans.