Types of Mortgage Loans

Those seeking the assistance of a home mortgage consultant will find a variety of available loan types. Understanding the features and researching the costs of each online is the key to making an educated borrowing decision.

Fixed Rate Loans

Fixed rate loans, the most common home loan type, have the same interest rate over the life (30, 20 or 15 years) of the mortgage. While property taxes and insurance rates may fluctuate slightly, the principal and interest payments remain the same. Homeowners seeking a fixed rate loan must generally be able to supply a five-percent down payment.

Adjustable Rate Loans

Adjustable rate mortgages (ARMs) were created to assist those in need of lower payments. ARMs begin at a relatively low interest rate, and slowly increase at designated times, depending on the market. Borrowers who plan to own their home for a short time or anticipate a pay raise may wish to consider an ARM. While ARMs often include rate caps, they can be significantly higher than fixed rates.

Balloon Mortgages

Balloon home loans are best for short-term residents. These loans are available at a lower interest rate than fixed loans, but must be paid off in five to seven years. If the borrower is still in the house when the loan becomes due, he must refinance or pay off the remainder.

Select a Reliable Home Mortgage Consultant for Lending Assistance

If you're interested in buying or refinancing a home, you'll find unbiased advice about whether you are getting a competitive loan when you visit your trusted mortgage advisor online. Email info@trusted-mortgage-advice.com for direct assistance with your lending needs, or for assistance taking a comprehensive second look at your loan.