The 3 Types Of Mortgage Loans

Currently on the market, there are several varieties of mortgages available. Sometimes it can be difficult to tell which mortgage loan is suitable and applicable to you. I will speak of the 3 main types of mortgages on the market. Most banks and lending institutions offer mortgage loans that belong to one of these categories. 1. Fixed mortgage loans fixed loans are the most popular and common among the three types of mortgage loans. You can take a mortgage with a lender and you pay a certain repayment amount for a specified period of time. Most people usually choose 30 years fixed mortgages, such as the monthly repayment amounts are low and interest rates usually smooths over a period of 30 years. One disadvantage of 30 years fixed mortgage and you have to repay more for your mortgage loan in total compared to someone who takes a loan of 15 or 5 years. There are periods of time even shorter, like 5 years, 10 or 15 years fixed mortgage loans. It allows people who want to pay their home in a shorter period of time. Of course, you must make sure you have the financial ability to reimburse higher monthly repayments. There is also another sub-category of mortgage loan called adjustable rate mortgage or ARM. Usually, we begin with an interest rate lower than a loan of 30 years fixed mortgage. So ended up paying less each month for your mortgage repayment. However take note that the arm is highly variable depending on interest rates. In other words, you pay less for monthly repayment, if the interest is low and pay more when interest rates are high. 2. Convertible loans, convertible loans are becoming increasingly popular because it allows people to maintain their mortgage loan options open to allow greater flexibility. If you find interest rates are too high, you can convert a fixed-rate mortgage loan. If interest rates are low, you can also convert to ARM based mortgage loans. There are too many varieties of convertible loans in this category. However I have a list type of convertible loans I dealt. Balloon loan balloon loan is a fixed rate convertible loan. Usually, you start out small repayment monthly repayments for a period of years, usually 5 or 7 years. At the end of that period, you will need to repay the loan in one installment. So what is the advantage of a balloon loan? It is mostly used by investors or property dealers who are trying to sell the house in a short period of time. To be eligible for low interest rates without locking their money on a house. Since it will have a large sum of money when you sell the house, will not be a problem to return the lump sum payment. 3. These mortgage loans are special loans that have only been offered to a group of people. For example, FHA mortgage loans are only available to first home buyers or people with bad credit. Another is the veteran affairs mortgage loan. They are only offered to widows of the U.S. military. The best way to find out if you qualify or is suitable for a mortgage loan is to speak to a professional mortgage consultant before deciding to accept any offer guides