| Your mortgage is one of the largest investments you | | | | adjusts your mortgage, often every year on your |
| make. Choosing the right loan is important and will help | | | | loan's anniversary date. You should only consider an |
| you avoid making a 15 or 30 year mistake. Before | | | | adjustable rate mortgage if you can handle changing |
| applying for a mortgage it is important to familiarize | | | | interest rates and payment amounts. |
| yourself with basic mortgage terminology; here are the | | | | Jumbo Mortgages |
| basic types of mortgage loans to help you get started | | | | There is a limit that traditional mortgage lenders well |
| on the right foot. | | | | lend. This amount is called the conforming mortgage |
| When your parents applied for a mortgage there was | | | | limit and is set by the institutions in the United States |
| typically only one option available to them: a traditional | | | | that regulate the mortgage industry, known as Freddie |
| 30 year mortgage with a fixed interest rate. Today | | | | Mac and Fannie Mae. In 2006 this limit is $417,000. If the |
| there are dozens of choices and options for your loan, | | | | home you are purchasing is over this limit you may be |
| ranging from fixed to adjustable interest rates, jumbo | | | | required to seek your mortgage from a specialty |
| mortgages, and option loans. Here are the basics you | | | | mortgage lender. These specialty mortgages are |
| need to know. | | | | called "Jumbo" mortgages. Jumbo mortgages come |
| Fixed Interest Rate Mortgage Loans | | | | with higher interest rates and fees than traditional |
| The most popular variety of mortgage is the traditional | | | | mortgage loans so it pays to shop around from a |
| loan with a fixed interest rate. Fixed means the interest | | | | variety of Jumbo lenders. |
| rate and monthly payment do not change over time. | | | | Balloon Mortgages |
| Homebuyers who want predictable payment amounts | | | | Balloon mortgages are a special type of loan intended |
| with little or no risk will find a 30 year fixed rate | | | | to provide short term financing only. The term length of |
| mortgage to be their best option. | | | | a balloon loan is very short, often only five to seven |
| Adjustable Interest Rate Mortgage Loans | | | | years. At the end of the term the entire loan balance is |
| Adjustable rate mortgage loans come with lower | | | | due. This large payment is referred to as a "balloon" |
| interest rates than a comparable fixed rate mortgage, | | | | payment. This type of mortgage is useful for real |
| at least initially. Adjustable rate mortgages typically | | | | estate investors and homeowners in certain situations; |
| come with an introductory interest rate that will change | | | | however, it is often abused by predatory mortgage |
| at the end of the introductory period. This type of | | | | lenders. Unless you know exactly what you are getting |
| mortgage is "adjustable" because the mortgage lender | | | | yourself into you should avoid this type of mortgage. |
| will change your interest rate and payment amount at | | | | You can learn more about your mortgage options, |
| regular intervals specified in your loan contract. The | | | | terminology, and common mistakes to avoid by |
| interest rate is tied to a financial index and will rise and | | | | registering for a free mortgage guidebook. |
| fall based on changes in the index when the lender | | | | |