What are the different types of mortgage loans available?

Different Types of Mortgages Available - Which is the Best?

Typically, there are only two products. Fixed rate product and Adjustable rate product. Within these two main categories are many sub products. 

What kind of mortgage to get?

Fixed rate product: 15, 30 Years Mortgage Rate

The most common being 30 Year Fixed rate and 15 Year Fixed rate out of the Fixed rate Product. A 30 Year fixed rate is called a psychological product. Whether some one stays in the home or not but just because the payments are fixed and the mortgage borrower knows each month what his payments are going to be. He feels safe because he can manage his expenses as the payments are fixed. So this typically comes with a higher rate of interest than on any other product type.

Adjustable Rate Product ARM: Best Mortage Rate

Then we have Adjustable rate product or ARM or adjustable rate Mortgage. Here the rates are fixed for first few years of the mortgage and rates change when the time frame for the rates to be fixed is over. In other words. Let's take 7/1 ARM. It means that the rates will be fixed for first 7 years so your payments to are fixed. The amortization will be calculated over 30 years. However beginning of the 8th year the rates will change once a year within a set parameter which is provided to the mortgage borrower at the time you buy such a product.

As an example: a 30 year fixed product at 6% for $ 400,000 mortgage would mean a payment of $ 2398.20 every month until the end of 30 years with no changes.

A 7/1 ARM at 6% for $ 400,000 Loan amount would mean a payment of $ 2398.20 which is the same as above BUT only for first 7 years. So you see the amortization in both the cases being 30 years. The payment is the same. However the beginning of the 8th year in ARM case. The mortgage payment could be the same or more or less than $ 2398.20.

There are many different forms of products be it on ARM or fixed. 

For more information visit www.affordable-payment.com or Call 323-705-3191 if you are a California Mortgage Borrower or If Texas Mortgage Borrower Call 713-463-5181 EXT 154