Types Of Mortgage Loan

Types of mortgage loans offered by lenders include many different choices versus the traditional 30 year fixed rate option due to the expansion of homeownership and the growth of the real estate market. Fixed rate mortgages in this day include 30 year, 15 year, bi-weekly and convertible mortgages. A 30 year fixed rate usually offers the lowest monthly payment. Some lenders offer additional fixed rate options with terms of 20, 25 and even 40 year terms. Of course the longer the term, the more interest the borrower pays. A 15 year fixed rate will have less interest and be paid off in half the time compared to a 30 year term, but the monthly payments are going to be higher.

A bi-weekly mortgage will cut off the interest tremendously on a fixed rate mortgage. Bi-weekly types of mortgage loans are set up as 30 year fixed loans but with half the payment made every two weeks. The interest for types of mortgage loan that are bi-weekly will shorten the term as much as 10 years. Bi-weekly payments will also build equity in the home much faster. Use a calculator online and figure the savings of a bi-weekly payment plan in both time and money. Every potential homeowner needs to make sure that the payment schedule is affordable. Foreclosure is far too common and only shows a lack of responsibility and planning that is vital to homeownership. It is important that potential homeowners face reality. "Examine me, O LORD, and prove me; try my reins and my heart" (Psalm 26:2). If they can't afford the payments, they have to look at other choices.

Premier mortgages, another option, offer the borrower both fixed and adjustable rates during the term. With a premier mortgage loan the initial interest rate starts out lower but will end up going up substantially usually after a seven-year period. With these types of mortgage loan, this could work out well for the homebuyer who plans to stay in their home for no more than seven years. Consider all options based upon time spent in a home. Check out these types of mortgage loans on the Internet.

Lender buy-down loans are additional options that guarantee an initial discounted rate. The interest rate on these types of mortgage loans will continue to go up each year until the fixed rate is reached after three years. Another type of a buy-down is a compressed buy-down. These types of mortgage loan, does the same thing as the lender buy-down but only the interest rate goes up every 6 months instead of every year. Convertible fixed rate options allow the homeowner to adjust their rate based upon a set amount of time. For these kinds, the homeowner has to pay a fee depending on the interest adjustment. A convertible adjustable rate will allow the homeowner to turn their adjustable rate into a fixed rate after a certain period of time.

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