A Blanket Mortgage covers multiple properties on the same loanWritten by Syd Johnson
Blanket mortgages are mostly used by commercial developers for one of two purposes: first, they might have a plot of land that they plan to develop into multiple lots and sell them off. Instead of getting a mortgage on each individual lot, they get a blanket mortgage for entire development. The second is if someone, not necessarily a commercial developer, has multiple plots already developed and wants to use all of properties as collateral for a new loan. One lots are developed, owner will get a release to clear title on each individual lot that is sold. A good application of this would be a commercial development or a subdivision. The blanket mortgage covers entire thing during construction, and then a release is obtained for each parcel as it is sold off. A release clause must be built into blanket mortgage that allows developer to sell off each unit of property as long as certain percentage of entire debt is paid off.
| | Short on Cash? Get a Mortgage with a Buy DownWritten by Syd Johnson
A buy down is an alternative financing technique where you make significantly lower payments for first few years of loan, and make up difference with larger payments in later years of loan. The initial payments might be interest only or less than interest payments, so you can expect to pay a much larger monthly fee when you actually start working on principal. Loan structure If you get a temporary buy down, seller might provide loan with a very low interest rate and no up front fees or points. This will make your loan package extremely cheap. Your monthly payment will be significantly smaller than actual amount required to pay off monthly interest and decrease loan principal. Then according to contract interest rate is increase by a small percentage each year, until your payments level off and cover both monthly interest payments and a reduction in principal. By time loan is actually paid off, you will have a very large monthly bill because all of fees and points that you didn’t pay up front were rolled over into loan. You didn’t skip anything you just decided to pay it all later.
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