Different Kinds of Home Mortgage Loan
Did you know that there are different kinds of home mortgage loan? Owning our first house is a dream come true for most of us but many first time buyers may find the whole process of home mortgages a little confusing. This article examines the different types of mortgage loans that are available to you.
Learning to understand the options that we have to choose from can help novice buyers to find a home mortgage loan that suits them. Here are some examples:
* A fixed-rate home mortgage loan is available in several options. You can decide to repay your loan in 30,20,15,10 years. During this time your interest rate and monthly payment don't fluctuate.
* A 10/1 year adjustable rate home mortgage loan will give you the benefit of your interest rate and monthly payment staying the same for the first ten years. After this ten year period the rate of interest may be raised or lowered - based on current interest rates.
* A 7/1 year adjustable rate home mortgage loan is similar to the 10/1 year loan. In this case the interest rate stays the same for the first seven years of the loan. After the seven year period the interest rate will be adjusted up or down according to prevailing rates.
* The 7 year balloon home mortgage loan features constant interest rates for the first seven years of the loan. After this period the loan is due in full. This means that you will need to apply for refinancing after seven years.
* A 5/1 year adjustable rate home mortgage loan features interest rates and monthly payments which remain constant for the first 5 years after which interest rates are adjusted annually according to prevailing interest rates. This may result in a higher or lower interest rate.
* A 5/5 year adjustable rate home mortgage loan makes use of static interest rates and monthly payments for first 5 years of the loan. After this time interest rates may go up or down according to current rates.
* A 3/1 year adjustable rate home mortgage loan features interest rates and monthly payments which are static for the first 3 years of the loan. Thereafter, the interest rates and monthly payments may rise and fall according to current interest rates.
* As a final option you may choose a 1 year adjustable rate home mortgage loan in which the interest rate is adjusted on a yearly basis.
Which home mortgage loan you choose, is up to you but before you make a decision, remember that you will be in debt for many years. The onus is on you to stay informed, talk to professionals and above all get the best deal for your money. Good luck in your new home!
