The 3 types of mortgages
Currently on the market, there are many types of mortgages available. Sometimes it is difficult to say what mortgages and suitable for you.
I will discuss the 3 main types of mortgage loans on the market. Most banks and lenders offer mortgage loans that belong to one of these categories.
1. Fixed Mortgage Loan
Fixed mortgage loans are the most popular and common among the three types of mortgages.
Take out a mortgage with a lender and you pay a certain repayment amount for a fixed period. Most people usually choose 30 years fixed mortgage loans with monthly repayment amounts are low and interest rates generally alike in a period of 30 years.
A disadvantage of the 30-year fixed-rate mortgage loans must be repaid more for your mortgage loan products as compared with someone who has a 15 or 5-year loan does.
There are also shorter time periods such as 5 years, 10 or 15 years fixed mortgage loans. It allows people who want to pay off their house in a shorter period. Of course, you must make sure that you repay the financial capacity to higher monthly payments.
There is also another sub-category of mortgage loans than variable rate mortgage or ARM. In general, you will start with a lower interest rate compared to a 30-year fixed-rate mortgage loans. So ended up paying less each month on your mortgage repayment.
But do note that ARM is highly fluctuating depending on interest rates. In other words, you pay less for monthly repayment when interest rates are low and pay more when interest rates are high.
2. Convertibles
Convertible bonds are increasingly popular because it allows that people keep their mortgage loan options open and allowing for more flexibility.
If you are the interest rates are too high to see, you can convert to a fixed rate mortgage loans. When interest rates are low, you can also convert to ARM based mortgage loans.
There are too many varieties of convertible bonds in this category. But I have a sort of list of convertible bonds, I was dealing with me.
Balloon Loan
A balloon loan is a fixed rate bond. Normally, you run through the reimbursement of small monthly payments for a period of years, usually 5 or 7 years. At the end of this period, you must repay the loan in one sum.
So, what is the advantage of a balloon loan? It is used primarily by investors or property dealers who sell in view of the house in a short period of time. You can take advantage of low interest rates without locking their money for a house. Since they have a large sum of money if they will sell the house, it be a problem, the flat back.
3. Specialty Mortgages
These are mortgages that are offered only as needed on a group of people. For example, the FHA mortgage loans are only for the first time home buyers or people with bad credit.
Another is the veteran affairs mortgage loan. They are only offered to widows of U.S. military forces.
The best way to know whether you qualify or is suitable for a mortgage loan is the mortgage to a professional consultant to speak before you choose a mortgage offer.
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