subject: Your Guide To The Types Of Mortgage Loans Available To Borrowers [print this page] With all of the changes in the real estate and home financing markets in the last few years, you may be wondering what types of mortgages loans are available these days.
Yes, the basic types of mortgage loans include the traditional fixed rate and adjustable rate version, but did you know that there are also many other types of mortgage loans that are available. These types of mortgage loans include home equity loans, home equity lines of credit, interest only loans, balloon loans, and specialty ARM products, all of which we'll cover in this article.
Aside from the traditional mortgages that you might take out to purchase or refinance a home, the second most popular types of mortgage loans are the 2nd mortgages, such as home equity loans and home equity lines of credit.
These types of mortgage loans are often used in conjunction with primary or first mortgages, offering temporary access to cash which might otherwise be more expensive to obtain.
The types of mortgage loans that borrowers may look into to keep their payments low includes interest only loans. Interest only loans come in both fixed and variable rate versions, and the interest only period lasts only for a set number of years, after which the principal is spread out over the remaining term of the loan. These types of mortgage loans are good for people, such as investors with rental properties, that want to keep the payment to a minimum, to maximize cash flow each month.
Balloon loans make up other types of mortgage loans which may be of interest to borrowers. Balloon loans have a set period of time after which the loan must be paid off, most likely through a refinance, otherwise the rate will increase significantly. The advantage to these types of mortgage loans is that the rates are lower than their 30 year fixed counterparts, and may be a better option for someone looking to be in a property for a short period of time.
The types of mortgage loans that everyone needs to be aware of, and leery of, are the specialty adjustable rate mortgages. These types of mortgage loans often go under the name of Option ARM, and are only for people that know how to use them. Basically they have the potential to increase mortgage principal over time, and have a lot of stipulations in the fine print. Hopefully this article has increased your knowledge of loans that are available for mortgages.
