COMPARE MORTGAGE
HOME LOAN PRODUCT OVERVIEW TYPES FIXED ADJUSTABLE ARMS HOME BUYING GUIDE PRACTICAL
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INFORMATION
When
buying a house, be sure to compare and understand the
different types of mortgages.
A
COMPARISON OF POPULAR MORTGAGE PRODUCTS
Property
purchasing and investment has become big
business over recent years, and this is
reflected in the wide range of mortgage products
available for potential property purchasers
these days.
With such a
vast range of choices, it can be hard to decide
what type of home loan to opt for. However,
there are pros and cons with all mortgage types,
and the best way to determine which is the best
loan for you is to simply compare the benefits
and costs.
COMPARING
DIFFERENT TYPES OF MORTGAGE
LOANS
Fixed rate mortgages
One of the most popular types of mortgage, fixed rate mortgages offer fixed
rates to consumers throughout the life of the loan or for a specified
period. This can help those on a budget or with a fixed income to enjoy
easier budgeting, as there will be no fluctuation in monthly repayments on
the mortgage. However, if the interest rates fall those on a fixed rate will
have to continue paying higher rates.
Adjustable rate mortgages
Also known as ARMs, these mortgages offer a lower starting interest rate,
which can prove far more affordable for those with limited funds or those
looking for great value. Although the interest rate on an adjustable rate
mortgage can rise, it can also fall, and consumers interested in this type of
mortgage have to be willing to take a gamble with regards to which way the
interest will go, and by how much.
Two step mortgages
These mortgages are combined in nature, and are known as 5/25s and 7/23s. These
are thirty year mortgage loans. The 5/25s offer a five year fixed rate mortgage
followed by either twenty-five years of fixed rate repayments or a one-year
adjustable. The 7/23s offer seven years on a fixed rate and then twenty-three
years fixed rate or one year adjustable. The interest rate with these mortgages
is higher than with a one year adjustable but is lower than a thirty-year fixed
rate.
Balloon mortgages
These mortgages can be taken over various periods, and can work on an interest
only repayment basis as well as on a capital and interest repayment basis.
Whether you decide to pay interest only over the term of the loan or whether you
make capital and interest repayments, at the end of the loan term the remaining
balance has to be settled. If you have been making interest only repayments,
this balance will in effect be the whole principal balance of the loan taken.
Bi-weekly mortgages
These mortgages are paid on a bio-weekly basis, and each repayment is fifty
percent of what a monthly repayment would be. However, because of the bi-weekly
structure of the loan, this means that consumers make two extra repayments on
the loan each year. Although these extra repayments may not seem like much, they
can actually make a big impact on the amount of interest you repay on the
mortgage over the entire term.
The above are a handful of the popular mortgage products offered to consumers
these days. Whatever you needs or circumstances, and whether you have good or
bad credit, it is possible to find a mortgage plan and package to suit your
needs and your circumstances perfectly.
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Home Mortgage Information
When
buying a house, be sure to compare and understand the
different types of mortgages.