of Mortgage Loans
you are buying a house the major consideration (other
than finding the right house for you that you like
of course!) is deciding on whicy type of mortgage
loan is right for you. It is important to understand
the major differences between mortgage loan types.
Below is a brief summary of the major differences.
There are two
basic types of home mortgage loans, fixed and variable.
Fixed rate mortgage loan
This is the standard type of loan that is most common.
As the name of the loan says, you pay a fixed rate
over the life of the loan. In most cases this type
of loan term is either 15 or 30 years.
Adjustable rate loan (ARM)
With this type of mortgage, the interest rate you
pay (and therefore your payments) will change as the
years go by. Generally the interest rate during the
first year, and over the first several years is below
the market rate. Over a period of time, the interest
rate will change based on the market interest rate
environment and the terms of the loan.
and other types of mortgage loan structures
There are other types of loan structures
that are typically variations or even hybrids between
fixed and adjustable mortgages. Here are the major
types of home mortgage loans: