Recently there have been many stories in the news about mortgages and government programs. If you have a mortgage or want to get a mortgage it is important that you understand what types of mortgages are available and how the mortgage interest rates differ.
Here is some information a few types that are available:
1. Fixed rate – The monthly payments for this type of loan remain constant throughout the life of the loan. Fixed rate mortgages can come in a variety of terms (10, 15, and 30 year). Rates can vary based on the term, but usually the longer the loan term the lower the payment will be on a monthly basis.
2. Adjustable Rate – In contrast to the fixed rate, adjustable mortgage interest rates change with the market, so your payments would not be constant.
3. Balloon – Similar to the fixed rate, the balloon has consistent monthly payment amounts, but the term is typically shorter (5 to 7 years). At the end of that time you would have to pay off the remainder of the loan or refinance at the rates that are available in the market.
4. Interest Only – In contrast to the other mortgage types, you only pay the interest (not principal) on a monthly basis for a specified time period for this loan. Once that time period is up your payments will increase to include the interest and principal.
These are just some of the types of mortgages that are available to consumers. Be sure to do your homework and understand what type of mortgage would provide the right interest rates for your financial situation. Your home will probably be your largest financial asset – be sure to understand your options and make a decision you can live with.