Many buyers and sellers are finding it necessary and beneficial to incorporate one of the following methods of financing in their real estate transactions.

 ASSUMPTION OF MORTGAGE - Agreement by a buyer to pay the remaining payments on an existing mortgage.  The seller remains obligated if the buyer fails to pay, unless the lender agrees to release him. o:p>

 (ARM) ADJUSTABLE RATE MORTGAGE - Interest rate is adjusted periodically to market rate and is usually lower initially.  However, if interest rates increase, your monthly payment will increase.  If interest rates decline, your monthly payment will decrease.  When considering an adjustable rate mortgage (ARM), the following points should be reviewed:

·        The initial interest rate.

·        The index that the new rate will be measured by.

·        How often the rate will change.

·        Whether there is a cap (or maximum) that the rate can vary, at each adjustable time.

·        Whether there is a cap (or maximum) interest rate to the entire loan.

 BUY DOWN MORTGAGE - An arrangement that allows a buyer to put cash up front in return for a lower interest rate than existing rates.

 CONTRACT FOR DEED OR LAND CONTRACT - Agreement to purchase real estate on an installment basis with the title remaining in the original owner’s name until the buyer completes all payments.

 FIXED RATE MORTGAGE - The interest rate and payment of principal will remain the same for the length of your loan.  However, if taxes and insurance are included in your house payment, your payment may change from year to year.

 (GPM) GRADUATED PAYMENT MORTGAGE - Payments start at a lower rate and usually increase for the first five to seven years and remain constant for the remaining term of the mortgage.

 GROWING EQUITY MORTGAGE - An agreement where a buyer takes a loan at a fixed rate, but agrees to increase his payment two or three percent annually.  These increases are applied directly to the loan principal, allowing the loan to be paid off earlier than normal.

PREQUALIFICATION - Informal estimate of how much financing a potential borrower might expect to obtain.

 SELLER FINANCING - Agreement of a seller to carry all or part of the financing for the buyer.