| According to "any licensed person or entity advancing | | | | the interest remain fixed for 15 years (by which time |
| funds that are to be repaid. Also known as a | | | | the house can be built and the amount paid off) this |
| mortgagee" In other words lender is someone who | | | | can be applied to cases of short term loan and the |
| lends money temporarily to a person on the assurance | | | | owner decide to sell the house in a few years time. In |
| that he repays within an agreed amount of time with | | | | case of the 40-year fixed mortgage rate the rate |
| interest. These lenders may lend money for different | | | | remains fixed for 30 year period and is usually |
| purpose or stated in other words money is borrowed | | | | recommended for those people where they decide to |
| for different reasons like educational loan, hospital loan, | | | | built the house with the help of the loan and stay there |
| loan to built a house, loan to start a business, etc. | | | | for a long period. It is commonly believed that lenders |
| Different sources like individuals, savings and lending | | | | reduce the interest rate in a 30 year fixed rate |
| institutions, Banks, Government etc., again offer loans. | | | | mortgages than in a 15 year fixed mortgage rate. |
| The most common reason for borrowing is car loan, | | | | The Adjustable Rate Mortgages or ARM is where the |
| personal loan and home loan. The lenders usually ask | | | | loan rate remains fixed for a period of time for |
| for a security before the money is lent, the security | | | | example for a annual rate mortgage the rate remains |
| might be in the form of an asset like house, land etc., | | | | fixed for one year and adjusts according to the |
| What we are going to see here are the most | | | | prevailing rate. This is the most common mortgage |
| common types of loan prevalent in United States. The | | | | facility as the interest rate reduces when the rate |
| common type of mortgages are a. Fixed Rate | | | | index falls and the borrower is at an advantage |
| Mortgage b. 30 year fixed rate mortgages c. 15-year | | | | because of the same. Balloon Mortgages are where |
| fixed rate mortgage and d. Adjustable Rate | | | | like the ARM or Fixed Rate Mortgage the amount |
| Mortgages and e. Balloon Mortgages. | | | | remains fixed for a period of time and when the period |
| According to the Fixed Rate Mortgage, the loan | | | | is lapsed the rest of the amount is paid accordingly. |
| interest remains fixed for a long period of time and | | | | The above-mentioned mortgages or loans are usually |
| doesn't change. The only disadvantage is that, when | | | | used while building and selling a house. Whereas the |
| the interest decreases the rate remains the same and | | | | ARM or the Adjustable Rate Mortgage is a prevalent |
| the borrower looses on the decreased rate. In case of | | | | type of loans that the lender might apply in any other |
| the 15-year fixed rate mortgage the loan amount and | | | | types of loans. |