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Explanation: Mortgage Types – Fixed Rate Mortgages

The basic mortgage has always been the 30 Year Fixed Mortgage. With this type of mortgage you get an interest rate that stays the same (fixed) for the entire length of the term. What this means is that you can count on paying the same monthly payment for the next 30 years without any “surprise” increases in the amount. You know what your payment will be each month and you can make your budget accordingly. There are now 15, 10 and even 5 year fixed mortgages but they come with a hefty monthly payment.

Explanation: Mortgage Types – Adjustable Rate Mortgage

Another mortgage example is the Adjustable Rate Mortgage or ARM. This type of loan adjusts to the fluctuations in the interest rate that is determined by certain market forecasting indexes. The interest rate of this loan is initially lower than the fixed rate but after the introductory period the loan then begins to fluctuate. This is a good choice when interest rates are low but can be burdensome when interest rates are high. One disadvantage of these loans is that you cannot predict exactly the monthly payments because they are subject to change.

Explanation: Mortgage Types – Convertible Mortgages

Convertible Mortgages are another example. This is a kind of hybrid of the fixed and adjustable mortgage. This is popular because it has flexible options; when rates are high you can convert to the fixed rate and when the rates are low you can convert back to the adjustable rate. This loan has other names such as Reducing Interest, Reduction Option, etc.

Explanation: Mortgage Types – FHA and VA Loans

The final two mortgage types are for special social categories. The FHA Loans by the Federal Housing Authority guarantees the repayment of loans made by private lenders to low and moderate-income level populations. VA Loans, by the Veterans Administration, guarantees the repayment of funds made by private lenders to qualified veterans who have served in the United States Armed Forces and the National Guard.

This is just a simple basic overview of the mortgages available today. With the above information you must now begin to get much more extensive information on the specific features that fit your particular situation best. The Internet is your best source for finding out this information because it allows you to make comparison rate shopping very easily.

The Internet is also the best resource for finding a lender with whom you can do business. Be sure to have an in depth discussion with your lender about the particular loan you are getting before you sign any papers binding you to a contract. Remember, never sign a contract if you any doubt about the terms of the mortgage agreement that is presented to you.

Jamie