6 Different types of home mortgage loans
In order to own a home, many of you take out home mortgage loans. In case you take out a home mortgage loan, you are required to pay monthly mortgage amount to the mortgage lender. Since a large variety of mortgage loans are available at the market place, chances are there that you may get confused regarding the selection of a mortgage loan. But, it is very much important to take out the mortgage loan which is very much affordable and suitable to you. In order to find out the best mortgage loan, you need to take appropriate mortgage advice. Here we discuss about different mortgage loans available at the market place.
Fixed rate mortgage loan
This is oldest type of home mortgage loan and still very much prevalent in the mortgage market. The rate on this type of home mortgage loan is fixed. Fixed rate mortgage (FRM) can be of 10-year, 15-year. 20-year, and even 30-year duration. In the event of higher rate associated with the adjustable rate mortgage (ARM), you may be interested to stitch to the safety of a fixed rate mortgage.
Adjustable rate mortgage loan
Adjustable rate mortgage is also a very common type of mortgage loan in the country. As the name suggest, the rate of on adjustable rate mortgage varies with the change in the market rate of interest.
Veteran affairs loan
This is the loan backed by the department of veterans’ affairs. This type of loan is available for the individuals and their spouses who had served the US Armed Forces. The terms and conditions of this loan vary with the years of services in the Armed Forces. The most important advantage of this loan is that you do not have to make any down payment to obtain this loan.
Federal Housing Administration Loan
Federal Housing Administration (FHA) loans are backed by the federal government. The eligibility criteria to obtain FHA loans are less stringent. It does not require you to have a very high FICO score to obtain this loan. Moreover, down payment requirement for this loan is comparatively less than many other types of loans. Due to its comparatively easy eligibility criteria, FHA loans are very popular among the first time buyers.
Interest only mortgages
In the interest only mortgage loans, you only make the interest only payments. Interest is calculated in such a way that it includes the interest as well as the principal amount. This type of loan is available only for a certain period of time.
Reverse mortgage loans
If you are above 62 years in age and if you have equity on your home, you are eligible for this type of loan. Here, you do not make monthly payments to your lender. Instead, in case of reverse mortgage loan, your lender makes monthly payment to you as long as you reside in the home. The rate of interest associated with these loans may be fixed or adjustable in nature.
These are some broad types of home mortgage loans. Anyways, before taking out a home mortgage loan, you need to check out whether or not it fits your bill.
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