Types Of Mortgages!

A fixed term (for example 15 to 30 years) and a fixed interest rate constitute a fixed rate mortgage. The interest rate and the term are fixed at the start of the mortgage. The monthly amount for the principal and interest will not change during the term of the mortgage giving the home buyer a lot of stability while managing his or her finances.

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An adjustable rate mortgage (ARM) has an interest rate, which will be adjusted up or down according to current interest rate levels. The monthly amount for your principal and interest payment will go up or down with these changes.

A homebuyer could have both types of mortgages for the duration of the loan. For example, the first 15 years could be fixed and the remaining years could be adjusted.

There are a wide variety of ARM's available, with the most common adjustment period being annually or every two years.

A balloon mortgage is similar to a fixed rate mortgage in that payments are made in equal installments for the duration of the loan. When the duration of the loan is over, the principal must be paid in full or in a "balloon" payment or the loan can be re-financed at the end of the initial term.

Which Type of Mortgage to Choose?
Acquiring a mortgage is one of the biggest expenses and therefore the biggest decisions a person will make. The right mortgage to choose is a very personal decision based on factors such as the length of time you plan to keep the home, your available finances both now and in the future, and any financial problems you may be able to foresee