| When you look at the number of loan products on the | | | | by the government, they are often easier to qualify for |
| market, deciding which one is right for you can be a | | | | and require a lower down payment than typical loans. |
| daunting task. There are fixed rate, adjustable rate, | | | | The interest rates even can be lower as well. |
| jumbo, conforming, etc. etc.; along with many variations | | | | VA Loans |
| of each. | | | | These loans are also guaranteed by the federal |
| The best solution to this problem is to speak with a | | | | government and are reserved for individuals with a |
| qualified lender to help you sort out your many options. | | | | history of active military duty, or their surviving spouses. |
| This article will give you a quick primer on some of the | | | | They are often provided with little or no down |
| most common types of mortgage loans: | | | | payment required and attractive interest rates. |
| Fixed Rate Mortgages | | | | Interest Only Mortgages |
| These are by far the most popular of mortgage types. | | | | Interest only loans allow a borrower to pay just the |
| They may be paid back (amortized) over 10, 15, 20, 30, | | | | interest portion of their home loan for a period of time. |
| or even 40 years with the interest rate and payments | | | | These loans can be very dangerous for consumers, |
| remaining fixed every month. | | | | as each month, they are making no progress on |
| Adjustable Rate Mortgages | | | | paying down their mortgage debt. They should only be |
| These are similar to Fixed rate mortgages, they are | | | | used with caution and a proper understanding of how |
| amortized over a period of years, however the | | | | they work. These loans are attractive to borrowers |
| interest rate can fluctuate. They have a set period of | | | | because they dramatically lowers their monthly |
| time for which the interest rate is fixed, then it will reset | | | | payments for a period of months |
| based on the market rate at that time. They offer | | | | Option ARMs |
| lower rates upfront, but rates can go up sharply | | | | With an Option ARM (Adjustable Rate Mortgage), the |
| without much notice. | | | | interest rate can adjust every month with no warning. |
| FHA Loans | | | | Borrowers are interested in Option ARMs because |
| These loans are guaranteed by the government and | | | | they offer a lower initial monthly payment, however |
| typically offered to first time homebuyers with | | | | the payments can rise steeply down the road. |
| moderate to lower income. Since they are guaranteed | | | | |