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Mortgage Definitionsby: Jeff Anderson Jumbo mortgage This is considered a nonconforming loan because it exceeds the loan limit set by Fannie Mae and Freddie Mac. The 2003 single-family loan limit is $322,700. The maximum loan amount is 50 percent higher in Alaska, Hawaii and the U.S. Virgin Islands. Balloon mortgage With these, borrowers get lower rates and payments for a specific period of time, which usually is anywhere from three years to 10 years. At that point, a borrower has to pay off the principal balance in a lump sum. Assumable mortgage Assumable mortgages are relatively rare. A homeowner with an assumable loan can "hand off" the loan to a buyer instead of paying it off using proceeds from the home sale. If rates are low and you can get one, by all means do so. If rates rise, buyers will want to assume your loan (and will be willing to pay more for your house!) because it'll be much cheaper than any loan they could get from a bank or other source. Subprime mortgages These loans have higher rates and more onerous terms than conventional loans, but they can help borrowers who have poor credit ratings.
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