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