There are many different types of mortgage loans available to the consumer. The most common amortized loan types are fixed-rate mortgages (FRM) and adjustable-rate mortgages (ARM).
Fixed rate mortgages are loans in which the interest rate is
locked at a specific and agreed upon rate. Many first time
homebuyers opt for this type of loan, as it allows them the ability
to know exactly what their loan payment will be each month. The
payment stays fixed for the entire term of the loan. Typical terms
are 5, 10, 15, 20, or 30 years.
Adjustable rate mortgages are loans in which the interest rate is
fixed for a short period of time only, and the variation in the rate
is determined by the market. Many homebuyers, especially those not
concerned with adhering to a strict budget each month, prefer these
types of loans. Although different lenders use different indices to
determine the market rate, some of the more common are Prime Rate,
LIBOR, and the Treasury Index.
Fixed rate loans often end up costing more than adjustable rate
loans, but they do not provide the stability of a known and
consistent monthly payment. Adjustable rate loans work by
transferring part of the interest rate risk from the lender to the
borrower, and are widely used when there is instability in the
market and fixed rates are difficult to obtain.
There are also other types of mortgage loans available, although
the aforementioned are the most common. Other types include blanket
loans, bridge loans, budget loans, deeds of trust, equity loans, and
wraparound mortgages. When you are considering your first mortgage,
you are likely to end up choosing a FRM or an ARM. These are by far
the most common mortgage types. Consult your local mortgage broker
for more information on these types of loans.
Interest rates have been relatively stable in recent years, and
many government agencies and financial institutions offer tax and
financial incentives for new homeowners. The Department of Housing
and Urban Development oversees a program called the Federal Housing
Administration in which the government will insure the lender
against a loss (in case you default on your mortgage). Veterans
Affairs also administers a program for military veterans, which
provides assistance and guarantees to veterans interested in
entering the market for a new home.
Whether you are new to the housing market or you have been
involved for decades, it pays to stay informed about recent
developments. New housing starts are at an all time high, and
interest rates are very reasonable. This creates an excellent
climate for prospective homeowners. The time just might be right for
you to buy your first home! Article Author Seymore Hennigan
Seymore Hennigan has worked in finance for many years. When he is
not crunching numbers or advising his family and friends on
investments, he writes freelance articles for
http://www.mortgageguide101.com - an independent mortgage guide
filled with extensive information about
GMAC
Mortgage.
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What is a Reverse Mortgage?
Simply stated, a reverse mortgage is a loan that enables homeowners (age 62 and older) to convert part of the equity in their home into a tax-free income without having to sell the home, give up the title, or take on a new monthly mortgage payment. More and more homeowners are using this to supplement their retirement income, pay for health care, modify their home, or just get some cash for eme. . . . Read
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Home Equity Loan – With a Reverse Mortgage, Your Home Pays You!
The home equity loan has become quite popular in the last five years, and Americans have tapped into the equity of their homes in record numbers. The reasons vary, although home improvement and debt consolidation are the most common reasons for borrowing against a home’s equity. In the last fifteen years or so, a new twist has arrived in the ho. . . . Read
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Home Equity Loan – A Reverse Mortgage Could Provide a Comfortable Retirement!
While only comprising about 1% of all mortgages, the reverse mortgage has gained in popularity in recent years. Federally insured since the late 1980’s, the reverse mortgage allows owners of paid-off homes to borrow against the equity in their homes in the form of a lump sum, a line of credit, or in the form of monthly payments. The loan is repaid when the owners die or when the home is sold or. . . . Read
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Reverse Mortgage Offers Fresh Approach To Income From Real Estate
If you owe 40 percent or less of your original mortgage, there is a great program that is available to you that will generate extra monthly income. It’s called a reverse mortgage. The reverse mortgage is similar to a home equity loan, only in the fact that it pays you the equity you have in your house. The differences, though, are many. If you have a large amount of equity in your home, you’ll . . . . Read
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