Different Types of Mortgages

Each home buying scenario is different. As such there are different mortgage options to fit your needs. Sorting through the options may seem difficult at first, but it is important to know how they vary in order to choose the option that is best for you.

• When people refer to mortgages they typically are talking about a fixed rate mortgage because it is one of the most common options available. With this type of mortgage, the interest rate on the loan stays constant and it is usually scheduled to be paid back in a 15 or 30 year period.
• Interest only mortgages are another popular option that require you to pay the interest on the loan for a given period of time. You will have to make larger payments, however, one this time period expires.
• With adjustable rate mortgages your payment varies from month to month. Mortgage companies use the market interest rate to determine the rate you pay on your loan.
• A short term mortgage option is a balloon mortgage. With this type of mortgage, you can make low monthly payments until one large final payment is due at a predetermined date.
• Government backed mortgages are also available for some applicants. These mortgages include some that are supported by the US Department of Agriculture loans for designated rural areas, the Federal Housing Administration for low income families, and VA loans for veterans of the United States Military.

Once you are aware of the different types of mortgages available, it will be easier to chose the option that is right for you.