Do the words fixed rate, balloon loan, and adjustable rate mortgages mean anything to you? If they don't and you are planning to buy a home, then you have to go through a quick terminology lesson. Those previously mentioned words happened to be the three most common types of home loans, so let's discuss each one of them so as to choose the best mortgage deal.
First is the fixed rate loan and with this, you will have a fixed interest rate and that will not change for the life of the loan. So if you plan to buy a home and stay in it until you pay it off, then this would be the loan for you. Just take note that if interest rates go higher, yours will just stay the same. But just hope that they will not go down as you will be paying a higher interest rate.
The second type of loan is the adjustable rate mortgage or ARM wherein its interest rate goes along with the market. So when the interest rate goes low, your home mortgage rate goes low as well and if high, then your rate goes high too. Since the rate on a home mortgage loan affects your payments, you will not have any idea how much you will be paying for your monthly mortgage.
For starters, if you are purchasing a house for investment purposes and you plan to sell it quickly, you might take advantage of low interest rates by getting this type of loan, particularly if it looks as if they may go lower.
Another smart move in using an ARM is to buy a home during the time when interest rates are on the decline. You can have the ARM changed to fixed rate home mortgage loan whenever the interest rates reach the bottom.
The third type would make you pay monthly for a fixed amount of time with a fixed interest rate; this is called the balloon home mortgage loan. At the end of the payment schedule, you will owe the unpaid balance in a single lump sum. The interest rates in this type are much lower than the fixed rate and the ARM.
Just one big problem for this type of loan is the large payment due at the end. On the other hand, if you plan to hold the house for just a short period of time, the balloon home loan might just suit you well.
When you get to really understand the types of home loans then you will be more confident and prepared to make the right decision in getting the best home mortgage loan for you and your family. - 15485
First is the fixed rate loan and with this, you will have a fixed interest rate and that will not change for the life of the loan. So if you plan to buy a home and stay in it until you pay it off, then this would be the loan for you. Just take note that if interest rates go higher, yours will just stay the same. But just hope that they will not go down as you will be paying a higher interest rate.
The second type of loan is the adjustable rate mortgage or ARM wherein its interest rate goes along with the market. So when the interest rate goes low, your home mortgage rate goes low as well and if high, then your rate goes high too. Since the rate on a home mortgage loan affects your payments, you will not have any idea how much you will be paying for your monthly mortgage.
For starters, if you are purchasing a house for investment purposes and you plan to sell it quickly, you might take advantage of low interest rates by getting this type of loan, particularly if it looks as if they may go lower.
Another smart move in using an ARM is to buy a home during the time when interest rates are on the decline. You can have the ARM changed to fixed rate home mortgage loan whenever the interest rates reach the bottom.
The third type would make you pay monthly for a fixed amount of time with a fixed interest rate; this is called the balloon home mortgage loan. At the end of the payment schedule, you will owe the unpaid balance in a single lump sum. The interest rates in this type are much lower than the fixed rate and the ARM.
Just one big problem for this type of loan is the large payment due at the end. On the other hand, if you plan to hold the house for just a short period of time, the balloon home loan might just suit you well.
When you get to really understand the types of home loans then you will be more confident and prepared to make the right decision in getting the best home mortgage loan for you and your family. - 15485
