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Open end mortgage - What is it all about?

Can anyone tell me what an open end mortgage is? What is the difference between that and a conventional mortgage.

sweeney's picture
sweeney | Joined: July 20, 2008 12:50 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello-

An open end mortgage usually refers to a Home Equity Line of Credit (or HELOC). This a 2nd lien against your property. It's called open end because there is no set term for the payoff of the principal balance. You can pay the interest only and have the principal balance remain the same for an indefinite period of time.

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chrisburns's picture
chrisburns | Joined: November 13, 2007 07:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

An open end mortgage is a revolving line of credit or equity line against your home.

A mortgage is an amortized fixed amount of money that cannot be borrowed against further.

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enriko's picture
enriko | Joined: March 5, 2008 04:00 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,
I googled it and that is what it cam up with.
I hope that helps you.

mortgage in which the mortgagor is allowed to reborrow against princpal that has been paid so far.

God bless

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

how does on use an open end mortgage work enable a borrower to payoff a homeloanfaster?

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

the original open end mortgages were exactly what enriko noted above. for instance, with an original amount of $100,000 paid down to $90,000; the borrower would have been allowed to borrow the $10K paid without affecting the terms of the mortgage; there was not a second lien created, as the original terms of the original note held forth.

this is well before the days of the home equity line of credit, i have to tell you all. oh, the memories...

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Is it possible to change a closed end mortgage into an open end mortgage?

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Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Liane

I haven't heard of converting a closed end mortgage to an open end one. Moreover, you should also note that the homeowner will require the permission of the mortgage holder to make use of the same collateral to secure a [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] in a closed end mortgage. So I think if you are planning to transfer a closed end mortgage to an open end one, better take the permission of the lender.

Thanks.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

niiccs, i think you've read the wrong post. "changing" from closed-end to open end mortgage is impossible. refinancing, however, is quite possible, if a borrower is qualified.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Is it possiable to get a open end mortgage on a home in 2009 ?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I don't think you will get a open end mortgage considering the present market situation.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

How do I go about geting a open end mortgage so I can pay off my mortgage faster? What steps do I need to take?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I don't think lenders will offer you a open end mortgage. However, you can try refinancing the mortgage at a lower rate so that your payments are reduced and you will also be able to save money.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

a true open end mortgage is one which allows you to pay your principal and reborrow later on. none of the first mortgage products out there are open-ended; they are closed-ended, meaning they are for a specific amount to be granted at one time.

a home equity line of credit is an example of an open-end loan. here, you borrow, repay, borrow again, repay, etc. for the duration of the life of the loan (if you wish).

i don't know where you got the idea, rudy, that you'd be able to pay back your balance faster with an open-end loan; but whoever may have given you that idea was incorrect.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

There is guy on TV tring to sell his book, he mentioned about open end mortgage. Concept should work, if the open end mortgage available. He said we deposit the money on mortgage account instead of banks, you can take your money less payment when ever you need, just like banks.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

what you describe is not an open-end mortgage.

when i write my book, i will go on tv and lie about it, too.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Yeah....I heard that same guy, which is why I'm here. As I understood the concept: There is a mortgage "account", with fixed-rate interest. The "owner" has a checkbook, and can pay bills off the acct. My pay check goes into the acct, and I use the principal as a loan if needed. I think the theory of paying down more quickly is that, with a pay check being deposited regularly, the interest paid is based on an increasingly smaller amount. Does that make sense? But I haven't found any bank that has this "product".

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I don't think it makes sense and thus you are unable to find a bank which offers such a "product".

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

there are no banks offering that product. it is something that has received a lot of publicity in the last couple of years. whether it's been proven to be pure folly or something that works well is an answer i don't have.

i have to tell you that i am very much a skeptic about it, though.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

The way this idea seems to work is that money is saved by depositing most of one's income into the mortgage account. The money is applied as principle thereby reducing interest accrual. Also the borrower should save on loan fees that result from not being able to access their equity in a close ended mortgage without taking out additional loans. ie an home equity line of credit. (responses welcome)

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

It can be simply defined as a mortgage in which the borrower is allowed to re-borrow against principal that has been paid so far.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i'm still not convinced that it's a workable solution to anyone's problems.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I saw the same guy trying to sell the book. I am looking for his name, in order to buy the book. GOT IT?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

It will be better if you could name the book.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

You can get the book by calling 1-800-958-8046

I saw the same infomercial and they also specifically said not to [url=http://www.mortgagefit.com/refinance.html]refinance[/url].
So how do you convert the loan??

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If you have an open end mortgage and if you want to refinance it, you should speak to your lender or other lenders of your area. This will help you know whether you would be able to refinance it or not.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

The book is called "Mortgage Free for life: secrets banks and lenders don't want you to know". The infomercial I saw had this number to call: 1-800-708-8967

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haridas_badhe's picture
haridas_badhe | Joined: May 11, 2009 06:44 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

WelCome..!!

Open end mortgage :
Mortgage under which the mortgagor (borrower) may secure additional funds from the mortgagee (lender), usually stipulating a ceiling amount that can be borrowed.
Mainly two Mortages One is closed mortage second is Open ended mortage.
In Closed mortage,no more indebtedness can be incurred.And In Open Ended, the amount authorized under the terms of the mortgage has not been reached.
Most conventional mortgages are packaged into pass-through mortgage-backed securities.

Thanks
Hari
Conventional Mortgage :In which the underlying terms and conditions meet the funding criteria means market condition.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Must an Open End Motgage be paid off before selling the property?

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

a mortgage would be paid off concurrent with the sale of a property. to do so before selling would be a hardship for most people.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I just converted my loan over to an open end mortgage with Citizens Bank.
I was able to pay off all my debt and lower my monthly payments. You have to pay the interest on the loan for the first 10 yrs. During that time you can pay and borrow as much as you want. After that for the next 15 years you have to pay back the loan. I am happy with this so far. I am out of debt and I have the freedom to adjust my payments if need be.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

chris, it is an excellent idea to ignore the interest-only aspect of your new loan and to repay the principal balance as much as you are able. this will not only reduce your overall debt, but decrease the amount of interest you pay and make it easier to avoid difficulty in the future.

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sunnyca2009's picture
sunnyca2009 | Joined: August 4, 2009 07:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thats really a very interestign concept

How much you borrow wil be based on the total value of the property

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

puzzlement abounds

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sunnyca2009's picture
sunnyca2009 | Joined: August 4, 2009 07:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

The world we live in is filled with lot of these puzzles

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I also read about the Open end mortgage in Debt Cures but am not able to find info. on how to do it. sounds like a it would work if a mortgage company would make that type of loan. Right now I divide my morgage payment by 12 and add that amount to my monthly payment to reduce the length of my loan. It gives me one extra payment a year and reduces my term by about 5 years or so. Wish there was a better solution as refinancing is so expensive and then you start over at 30 years again.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

lynn, refinancing doesn't require you to begin again with a 30 year loan. there are 10, 15, 20 and 25 year terms - if they fit your monthly budget. rates improve with the shorter periods, also.

what you're doing right now is an excellent way to prepay your loan. you're saving interest every month, reducing your principal every month and saving quite a bit of future interest as well.

you may well be best-served to continue to do what you're doing now, and perhaps modify it a bit by adding additional principal payments each month, or even just every so often.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have seen the same ad. I am still trying to figure out his angle other than selling books. So far it seems like an excel program set up for households to better help manage their finances. I can't figure out how anyone can borrow money for such a lenghth of time and not expect to pay intrest of any sort. That goes back to the old saying if sounds to good to be true it usuallly is.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I saw that guy on tv as well. If there is a such thing as an open end mortgage the banks won't tell you. I'm going to start asking different banks.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I saw the same program on TV also. How does a current FHA mortgage apply to an open ended mortgage? Can one of the experts reply?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

A Mortgage wherein the borrower is allowed to re-borrow against the principal that has been paid so far is known as open end mortgage. I don't think that the current FHA mortgage applies to this.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

• What if I did an open-end, would my original contract or language be affected? Like my property taxes and everything that was escrowed in the begging. I am a new home owner; I am not saying that I want to borrow any money. I just want to know if this would affect what I started in the beginning. For instance, my cousin them borrowed money, perhaps it was an open end case, or whatever, however, the regretted it because they said that they had to pay everything separate from how they had it in the begging.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

WHAT HAPPENS WHEN THE HOMEOWNER DIE ON AN OPEN END MORTGAGE?

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi mary,

The lender will try to recover the mortgage debts from the deceased homeowner's estate. If the heirs of the deceased person refinances the mortgage, then they will have to pay off the mortgage debt on time.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have an open end mortgage...my ex signed a [url=http://www.mortgagefit.com/quitclaim-deed.html]quit claim deed[/url] ... i thought the property was automatically belonged to me...I did try to [url=http://www.mortgagefit.com/refinance.html]refinance[/url] only to be told that I couldn't. How do I get myself out of this?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi meme,

If your ex had signed a quitclaim deed in your name, then you will be able to refinance the mortgage in your name if you meet all the required criteria of the lender. You should clarify from the lender as to why you could not get a refinance.

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