Mortgage Loans Information

Types of Mortgage Loans

There are several types of mortgage loans available today:
Adjustable rate mortgage loans
Fixed-rate mortgage loans
Balloon mortgage loans
Assumable mortgage loans
Construction mortgage loans
Seller financing
Jumbo mortgage loans
Two-step mortgage loans

The basic types of mortgage loans are adjustable rate mortgage loans and fixed rate mortgage loans.

Fixed rate mortgage loans
Fixed rate mortgage loans imply fixed loan interest rates and payments, which means that your loan interest rates and monthly payments do not change with time.

Adjustable rate mortgage loans
Adjustable rate mortgage loans (or adjustable rate mortgages, or ARMs) have loan interest rates and payments that change over the duration of your loan depending on the fluctuation of the market interest rates. Adjustable rate mortgage loans usually have an initial period when the interest rates do not change. This period may last from 1 month to several years.

Jumbo mortgage loans
There is a loan limit that states the maximum amount you can borrow. Other types of mortgage loans deal with this stated amount. If you need to borrow more money you need to obtain a jumbo mortgage that usually has higher loan interest rates.

Two-step mortgage loans
Two-step mortgage loans combine two other types of mortgage loans – adjustable rate mortgage loans and fixed rate mortgage loans. This type of mortgage loans offers fixed rated for a period stated in the agreement, the a period when you have adjustable rates, then again a fixed rate period and so on.

Balloon mortgage loans
This is the type of mortgage loans that implies low loan interest rates at the initial period but then you have to refinance the balance. People usually either sell their houses before the due day or get money from other mortgage loans. Balloon mortgage loans can be converted into other types of mortgage loans, for example adjustable rate mortgage loans or fixed rate mortgage loans.

Construction mortgage loans
While other types of mortgage loans are designed to help people buy a home construction mortgage loans help to build a home. This type of mortgage loans includes two steps of refinancing. During the first one you pay higher loan interest rates and cover only interest on the outstanding amount (usually you need more money as you have to pay your builders, etc.). The second step features fixed rates and reminds the fixed rate mortgage loans.



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