BLENDED MORTGAGE Meaning and
Definition
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A blended mortgage is a type of home loan that combines multiple mortgage products or interest rates into a single loan package. This unique financing option allows borrowers to take advantage of different mortgage terms and rates to suit their financial needs.
In a blended mortgage, two or more mortgage loans are blended together to create a customized loan structure that offers more flexibility to borrowers. For example, a borrower might have an existing fixed-rate mortgage with a high interest rate and wants to take advantage of lower rates available in the market. Through a blended mortgage, the borrower can combine the original mortgage with a new mortgage loan that offers a lower interest rate. The two loans are blended together, resulting in a new mortgage with a mixture of the interest rates from the original and new loan.
Blended mortgages can also incorporate different mortgage terms, such as combining a short-term mortgage with a long-term one. This allows borrowers to balance the benefits of lower interest rates with the security and stability of a fixed-rate mortgage.
The main advantage of a blended mortgage is the ability to customize the terms of the loan to better suit the borrower's financial situation. By blending different mortgage loans, borrowers can potentially reduce their monthly payments, take advantage of lower interest rates, or pay off their mortgage faster. However, it is important for borrowers to carefully consider the terms and conditions of the blended mortgage before proceeding, as it can involve additional costs and complexities compared to a regular mortgage.
Etymology of BLENDED MORTGAGE
The term "blended mortgage" does not have a distinct etymology of its own. Instead, it is a combination of two separate words: "blended" and "mortgage", each with their own origins.
1. Blended: The term "blended" comes from the Middle English word "blenden", which means "to mix or mingle together". It has its roots in the Old English word "blendan", from Proto-Germanic "blandaną", meaning "to mix" or "blend". The word "blended" is commonly used to indicate the process of mixing or combining different elements or components.
2. Mortgage: The word "mortgage" comes from Old French, specifically from the terms "mort" (meaning "dead") and "gage" (meaning "pledge").
