Before opting to get a mortgage loan it is good to ensure that you are not pressured with anything & you are well aware of your own present & future financial position. Once you determine these things try to know the types of mortgages which are available in the market. Also find out which one will best suit to you and what are the maximum benefits that you can derive from each types of mortgages.
Given below are some 5 major types of mortgages that are available in the market.
Fixed Rate Mortgage
It’s one of the most preferred types of mortgage loans available in the market. When you get a mortgage through fixed rate mortgage program your interest rate will remain the same and you don’t need to get unwanted shocks by seeing the sudden rises in the interest rates. Due to the fact that the mortgage payment you are going to pay will not change over the time you can organize your monthly budget accordingly. This is the safest type of mortgage loan. Most used fixed rate mortgages are
- 30 yr FRM (fixed rate mortgages)
- 15 yr FRM
- Convertible Mortgages
- Biweekly Mortgages
The traditional FRM will serve as a best mortgage program in all the years. When you choose a long tenure fixed interest rate mortgages it is enough to make low monthly payments. You can choose 30 yr FRM, 25 yr FRM, 20 yr FRM, 15 yr FRM or 10 yr FRM based o your affordability and financial situation. Only disadvantage of fixed rate mortgage is “you will be paying more money towards the interest than the mortgage”.
Adjustable Rate Mortgages
The interest rates of these loans will be adjusted according to the market trends. One of the best thing you can get out of these adjustable rate mortgages are “these types of mortgage loans are bendable to your present financial situation”. One can choose the mortgage loan at the time when the mortgage interest rates are considerably low and it can be adjusted although the tenure of the loan. It is one of a Standard mortgage in the United States.
Interest rates in these types of mortgage loans are subject to change according to the current financial indexes. So based on the index change your interests rates will get vary. Clearly you can expect some unsteady interest rate changes at anytime. So it is good to be prepared all the time. When you sign up with this Adjustable Rate Mortgages due to your present financial situation, you don’t need to worry about that you can refinance the mortgage at any time when things are settle down.
Next to fixed rate mortgages all people prefer the FHA standard mortgages nowadays. Reason is it is both reliable and secure from the lender and borrower perspective. Since these FHA loans are insured by the federal government people feel very convenient than the traditional loans. From the mortgage loan lender perspective it actually reduces the risk of foreclosures.
When your credit rating is poor or you don’t afford to pay some huge down payment or you are in the need of refinancing FHA loans will be the best option.
Features of FHA Loans
- No credit check
- Affordable down payments
- Affordable closing costs
- Affordable low mortgage insurance
- Simple terms & conditions
If you want to get a VA loan then you must be a veteran or military personal. Normally these VA loans offer too many benefits to the borrower than the other standard mortgage loans.
- Notable Features
- Low interest rates
- Credit Flexibility
- Low closing costs
- No Down Payment
This loan is especially designed for the retired people to enhance their retirement pensions, medical purposes and other social security. Main benefit of this loan is people can get a tax free income every month until they sell their home.