 Sam
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Joined: 21 May 2005
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Location: CALIFORNIA
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 Posted: Sat Apr 03, 2004 3:33 am Post subject: Pledge Account Mortgage |
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A Pledge Account Mortgage allows you to use a savings account as the collateral for your mortgage. You can pay off the home loan with the deposit in the account and the interest earned on the deposit.
The pledged account should be opened with your lender. It serves well when you are paying for a Graduated Payment Mortgage (GPM). You will be allowed to follow a low payment plan with a savings account linked to a GPM.
In case you don't have enough cash, you can always afford a down payment with a pledge account. The deposit in the account should be at least 10% of the purchase price or appraised property-value, whichever is less. You can also deposit enough funds in the pledged account in order to pay off real estate taxes and insurance premiums. Most borrowers having no escrow account use the pledge account for tax and insurance payments.
With a pledge account mortgage, you continue to earn the interest. And, the pledged money is returned when you can build up sufficient equity in the property. But a pledged account is not easily available with popular loan programs. You may also not get the most competitive interest rate with this kind of a loan program. |
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