This article discusses how to finance house - finance home loan. There are several variations on the conventional long-term, fixed-rate mortgage.
Flexible-rate mortgages: The most popular are the renegotiable-rate mortgage (RRM) and the variable-rate mortgage (VRM). General terms:
Interest-rate review and, if necessary, revision up or down every three, four, or five years, up to a total contract term of 30 years. The rate changes (generally limited to increases of 0.5 % or 1 %) are tied to a specific index, such as the Federal Home Loan Bank Board's. See finance house for more information.

The maximum total increase over the life of the mortgage is usually five percentage points.
RRM calls for negotiation of each change.
VRM changes are automatic.
Added cost: A one-percentage-point increase on a 30-year mortgage adds 63et to monthly payments for each $1,000 borrowed. Monthly payments on a $60,000, 30-year mortgage increase by $37.80 (63et x 60). Assumption: The homeowner will meet the increased costs with inflation-cheapened dollars, from a larger personal income.
Wrap-around mortgage: A contract between buyer and seller that combines old financing (the seller's own first mortgage) and new financing (provided by the seller). The seller collects payments from the buyer, including interest on the total financing, and applies part of it to the first mortgage. The seller gets a slightly higher rate of interest on the spread between the old mortgage and the wraparound rate, and the buyer gets a loan below the market rate.
Second mortgage: A buyer who is unable to assume the seller's mortgage without assistance obtains secondary financing, to be repaid over time. What to calculate: Whether the second-mortgage's high-interest cost, when combined with the assumed first-mortgage cost, is more or less than the current market rate for new first-mortgage financing.

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Land contract: The buyer makes mortgage payments directly to the seller, who retains title until the mortgage is retired.
Lease-purchase agreement: The purchase price is agreed upon, but the dosing date is delayed until the buyer obtains financing. Meanwhile, the buyer occupies the house at a stipulated monthly cost, part of which may be applied to the purchase price.
Installment sale: The buyer pays for the house over three or four years.
Land lease: The house is bought, but the seller retains ownership of the land. The contract must contain a long-term property lease giving the house's owner the option to buy the land. Value: Buyer's down payment and monthly payments are smaller.
Equity sale: Low-interest mortgage financing, generally one-third less than the market rate, is given to the home buyer in exchange for a percentage of the profit (usually one third) when the property is sold.
Interest only: Smaller monthly payments for a specified period, with principal paid when the property is sold or refinanced.

Balloon mortgage: Payment of interest only or scheduled amounts that do not retire the mortgage over its full term. The balance of the balloon is paid in full when the mortgage matures. Assumption: The house is sold or refinanced when the balloon is due.
Longer mortgage terms: To 40 years and more. Particularly applicable for lower-priced houses.

Variations: Leases with options to buy. Low first-year interest, with increases in each of the next three or four years. Low-interest bridge loans for buyers who haven't sold their homes.

Family Partnership For Financing Home Purchase: It may be the best way for many people to buy a home-certainly a lot better than asking relatives for loans.
How it works: Form a partnership in which relatives participate in raising the cash for the purchase price. At some future date, the house is sold or refinanced and the proceeds used to payoff the partners, including a share of any profit.
How it differs from a loan: The partnership, not the resident, owns the house. Each partner has equity participation. Also: Profits may be treated as capital gains. Interest earned on a loan would be taxable as ordinary income. Added benefit to the buyer: No payments are due until the house is sold or refinanced.