| This is an age-old question that people have | | | | payments go through the roof along with their |
| been asking for about as long as there has | | | | blood pressure. ARM's are unpredictable and |
| been home financing. Although the practice of | | | | chancy and are not recommended for most |
| lending has evolved dramatically over the | | | | buyers. Usually these loans are negotiated |
| past years, the basics are still the same. | | | | when interest rates are low and don't show |
| Indeed some of the old standby loans are | | | | signs of inflating in the near future but |
| still offered and are usually the best option | | | | that is a huge gamble as many have found out. |
| as well. This article will explore the most | | | | |
| commonly used home loans and explore some of | | | | Balloon Mortgages - This is another tricky |
| their merits and drawbacks. | | | | type of home loan. Essentially the practice |
| | | | of a balloon mortgage is to enable the home |
| Fixed Rate Mortgage - This is by far the most | | | | owner to pay only the interest for the first |
| common and desirable mortgage. It is also one | | | | term of the loan, usually 5-10 years. At that |
| of the oldest types of home loan going. This | | | | point the home owner must either pay the |
| is what most people are referring to when | | | | entire amount of the loan off or refinance |
| they speak of a mortgage. Fixed rate loans | | | | for the amount remaining. These kind of loans |
| are usually amortized over a set period of | | | | can work if you are only going to be in a |
| time, 30 years for example. The fixed | | | | home for a short time. However, long-term |
| interest rate is what makes these loans | | | | they are not a wise choice. |
| popular. If you can find a fixed rate | | | | |
| mortgage then you will always know what you | | | | FHA & VA Loans - These are both Government |
| loan payments will be for years to come. This | | | | insured loans. VA loans are available to |
| is highly valuable in creating a realistic | | | | Veterans only and FHA loans are Federal |
| budget that you can stick to in the long run. | | | | Housing Administration loans and a potential |
| This type of loan is so popular because of | | | | borrower must qualify for either. Keep in |
| the wild fluctuations that home loan interest | | | | mind that only certain homes qualify for this |
| rates go through. Once the loan is signed | | | | kind of loan program as well. |
| then the interest rate is fixed for the term | | | | |
| of the loan. | | | | Be sure to investigate your borrowing options |
| | | | carefully. The kind of loan that you choose |
| Adjustable Rate Mortgage - This kind of loan | | | | will be a major defining factor in your |
| is based on the borrower taking a chance that | | | | financial future and as such it is a decision |
| interest rates will decrease. ARM's are | | | | that should be made from an educated |
| notorious as many people bought into ARM's | | | | perspective. |
| only to see their interest rates and monthly | | | | |