| There are many different types of mortgages | | | | years, however, an ARM may be just what you |
| available. When selecting the right | | | | need |
| mortgage, you must take into account your | | | | |
| current financial situation and what you | | | | Balloon Mortgages offer an initial interest |
| expect your financial situation will be in | | | | rate that is lower than fixed-rate mortgages. |
| the future. You should also consider how many | | | | It keeps this low fixed rate for five to |
| points you wish to pay and whether you wish | | | | seven years and then requires a "balloon" |
| to be tied into a set interest rate for the | | | | payment. The balloon payment is the final |
| term of the loan or are willing to take a | | | | payment of the loan and pays off the entire |
| gamble and get an adjustable mortgage. | | | | balance. Monthly payments are low because the |
| We've listed a few of the more common types | | | | payments for those first five to seven years |
| of mortgages below. | | | | are amortized at a low interest rate over the |
| | | | total length of the loan. If you plan on |
| Fixed-Rate Mortgages offer an interest rate | | | | either selling your home, paying it off, or |
| that will never change over the entire life | | | | refinancing it before the balloon payment is |
| of the loan. If you lock in a rate of 7 | | | | due, then this type of mortgage may be right |
| percent that calculates a payment of $1,150 | | | | for you. |
| per month, then you know that in 20 years | | | | |
| you'll still be paying $1,150 per month. The | | | | Government Housing Loans help lower the cost |
| only things that will change will be the | | | | of mortgages so that more people can afford |
| property tax and any insurance payments that | | | | to own their own home. There are three |
| are included in your monthly payment. | | | | government agencies that insure mortgages. |
| | | | The Federal Housing Administration (FHA), |
| Adjustable-Rate Mortgages (ARM) have an | | | | which is part of the U.S. Department of |
| interest rate that changes based on changing | | | | Housing and Urban Development (HUD), The |
| market rates and economic trends. They | | | | Veterans Administration(VA), and the Rural |
| usually offer an initial interest rate that | | | | Housing Service(RHS), which is a branch of |
| is two to three percentage points lower than | | | | the U.S. Department of Agriculture. Only |
| fixed-rate mortgages, but they don't offer | | | | approved lenders can offer these loans, and |
| the stability or assurance of a known | | | | there are required standards that the |
| mortgage payment in the years to come. If you | | | | property has to meet in order to qualify. |
| don't expect to be in your home for many | | | | |