One of the many types of mortgage loans available today is what is known as an open-end mortgage. As the name implies, this type of mortgage allows you to borrow more money than you actually owe on your home. If you owe ten thousand dollars on a home and own it for five years, you can qualify for a hundred thousand dollar loan to buy the home. This sounds like a lot of money, but if you are paying on the home for that long, it could actually be a loss. If you have ten thousand dollars worth of equity in the home and have not made any payments on it, an open end mortgage can potentially save you thousands of dollars.
What Is An Open End Mortgage?
While this may sound like a good deal, there are some risks associated with what is called an open-end mortgage. One of the main risks of this type of mortgage is that if you want to refinance your home after it has been financed with this type of mortgage, you will end up paying a lot more for the mortgage. An open end mortgage is also tied to the property you have financed; therefore if you sell your home and choose not to pay the mortgage off, you lose the equity you gained in the home. This means that if you need to make repairs to the home or you simply want to move, you may end up owing the difference between what the mortgage was for and what you actually paid.
When you take out an open-end mortgage, you do so without actually owning the home. Instead, you are simply borrowing against the equity that is built up in the home. If you need to make repairs or even move out, you will need to come up with the funds to pay for them. This can be a big problem for people who have built up a large amount of equity in their home. The other major risk of an open end mortgage is that if you lose your home to foreclosure, you cannot get back the money you borrowed from your lender.
Another option for what is an open end mortgage is a second mortgage. With a second mortgage, you are using your home as collateral on the loan. This is not necessarily a bad thing, but you need to remember that you are still personally guaranteeing the mortgage to yourself.
The advantages and disadvantages of an open end mortgage and a second mortgage are similar to those of a home equity loan. Both require collateral and both require monthly payments. While the interest rates and payments on an open end mortgage are higher than a second mortgage, you may find that you can save money by paying off the second loan sooner than with a home equity loan.
The main difference between an open end mortgage and a second mortgage is that the loan has no limit on how much you can borrow. This means that if you want to buy a new house or expand your home, you do not have to worry about being limited by how much you can borrow. This can be a great way to take advantage of the current real estate market, and you should consider all of your options before making a final decision on what is an open-end mortgage.