Common Types of Mortgage Loans
When it comes to choosing a mortgage loan to purchase a home, there are a lot of different options to choose from. The best mortgage option for you might be different from the one that is best for your neighbor. If you are looking to take on a mortgage sometime in the near future, it might be helpful to know what some of the common types of mortgage loans are all about so you can make an educated decision when the time comes to make a choice.
The fixed rate mortgage is a very typical mortgage loan. This type of mortgage offers an interest rate that is fixed to one set rate. With the interest rate set, your monthly mortgage payment will be set and won't change over time. This mortgage allows people to truly plan on what their housing payments will be over the course of the loan.
Terms of loans for fixed rate mortgages can be ten years, fifteen years, twenty years, thirty years, forty years, and in some rare cases, fifty years. Lower interest rates are offered for loans that have shorter terms since they are lower risk loans for the lenders.
Another type of mortgage loan that has gained in popularity over the past years is the adjustable rate mortgage. It is often referred to as an ARM. Adjustable rate mortgages have interest rates that will change depending on the market interest rates at the time. Sometimes they adjust every three or five years.
Adjustable rate mortgages are another type of mortgage loan offered. They have become more popular and well known in the past few years as more and more people have been taking them out. Often referred to as an ARM, adjustable rate mortgages have interest rates that change throughout the term of the loan. This means your monthly mortgage payment will adjust as the interest rate adjust. The loans usually adjust every three or five years.
Interest only loans are mortgage loans that are commonly used for people using real estate as an investment. With this loan, the payments you make each month are only paid on the interest of the loan. If you were using the property as an investment and can find renters to pay the mortgage on the home, then you can make money selling the home years later when it has appreciated in value.
The fixed rate mortgage, adjustable rate mortgage, and interest only mortgage are the most commonly used mortgage loans. Depending on your situation, one of them could be the best mortgage for you.
The fixed rate mortgage is a very typical mortgage loan. This type of mortgage offers an interest rate that is fixed to one set rate. With the interest rate set, your monthly mortgage payment will be set and won't change over time. This mortgage allows people to truly plan on what their housing payments will be over the course of the loan.
Terms of loans for fixed rate mortgages can be ten years, fifteen years, twenty years, thirty years, forty years, and in some rare cases, fifty years. Lower interest rates are offered for loans that have shorter terms since they are lower risk loans for the lenders.
Another type of mortgage loan that has gained in popularity over the past years is the adjustable rate mortgage. It is often referred to as an ARM. Adjustable rate mortgages have interest rates that will change depending on the market interest rates at the time. Sometimes they adjust every three or five years.
Adjustable rate mortgages are another type of mortgage loan offered. They have become more popular and well known in the past few years as more and more people have been taking them out. Often referred to as an ARM, adjustable rate mortgages have interest rates that change throughout the term of the loan. This means your monthly mortgage payment will adjust as the interest rate adjust. The loans usually adjust every three or five years.
Interest only loans are mortgage loans that are commonly used for people using real estate as an investment. With this loan, the payments you make each month are only paid on the interest of the loan. If you were using the property as an investment and can find renters to pay the mortgage on the home, then you can make money selling the home years later when it has appreciated in value.
The fixed rate mortgage, adjustable rate mortgage, and interest only mortgage are the most commonly used mortgage loans. Depending on your situation, one of them could be the best mortgage for you.
About the Author:
Trinity walks people through the process of getting mortgage loans for people with bad credit and home loans for people with bad credit.
posted by Credit Counseling at
11:24 AM
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