Today, there are various mortgage types that potential customers may choose from. A mortgage is a loan given to a person who wants to build or buy a home or commercial property. Some people do not have liquid cash to buy such property. Such loans can be given by banks or other lending institutions.
The repayment period, method of repayment, interest rates and size of loan are usually negotiated by the lender and borrower. These terms might vary from one financier to the other. The various kinds of mortgages are described below.
Fixed rate mortgage: The interest rate remains the same throughout the duration of the mortgage. The amount to be paid per month is usually calculated using the years of repayment, amount of loan and the interest rate. You may negotiate with the lender for a fixed period of 20, 15, 10 years or even more. If you plan to stay in the house for ten years or even more, this type may be ideal for you.
Adjustable rate mortgage: This type of mortgage does not have a fixed rate of interest. The rates change based on financial indexes that are usually dictated by the current interest rates in the market. So, monthly payments may increase of decrease according to the change of index.
Two-step mortgage: It offers a fixed interest rate initially for a period of time after which the rate is adjusted to current market rates. There is 10/1 year adjustable rate mortgage where rates of interest are fixed for the first ten years then change every year based on the index. With 7/1 year ARM, interest rate is steady for seven years then changes according to index. ARM could be ideal for those who want to risk paying lower or higher monthly rates depending on the index.
Balloon mortgage: You may negotiate the payment period of this loan in terms of 7, 5, 3 year balloons. The repayment is at a steady interest for the duration of the balloon. Any amounts that are outstanding by the end of the selected balloon have to be settled fully. If you have plans of moving before the life of a mortgage expires, this type could be ideal for you. In this case, you may pass the loan to a new buyer.
The mentioned mortgage types are meant to assist people who want to take mortgage loan to choose wisely. There are lots of firms that offer mortgages. Majority are willing to negotiate suitable terms with their customers.
The repayment period, method of repayment, interest rates and size of loan are usually negotiated by the lender and borrower. These terms might vary from one financier to the other. The various kinds of mortgages are described below.
Fixed rate mortgage: The interest rate remains the same throughout the duration of the mortgage. The amount to be paid per month is usually calculated using the years of repayment, amount of loan and the interest rate. You may negotiate with the lender for a fixed period of 20, 15, 10 years or even more. If you plan to stay in the house for ten years or even more, this type may be ideal for you.
Adjustable rate mortgage: This type of mortgage does not have a fixed rate of interest. The rates change based on financial indexes that are usually dictated by the current interest rates in the market. So, monthly payments may increase of decrease according to the change of index.
Two-step mortgage: It offers a fixed interest rate initially for a period of time after which the rate is adjusted to current market rates. There is 10/1 year adjustable rate mortgage where rates of interest are fixed for the first ten years then change every year based on the index. With 7/1 year ARM, interest rate is steady for seven years then changes according to index. ARM could be ideal for those who want to risk paying lower or higher monthly rates depending on the index.
Balloon mortgage: You may negotiate the payment period of this loan in terms of 7, 5, 3 year balloons. The repayment is at a steady interest for the duration of the balloon. Any amounts that are outstanding by the end of the selected balloon have to be settled fully. If you have plans of moving before the life of a mortgage expires, this type could be ideal for you. In this case, you may pass the loan to a new buyer.
The mentioned mortgage types are meant to assist people who want to take mortgage loan to choose wisely. There are lots of firms that offer mortgages. Majority are willing to negotiate suitable terms with their customers.
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