There are a number of types of mortgage loans that you need to know before choosing one for your house.
Mortgage loan is a type of loan that is taken from banks or even private mortgage bankers or online brokers. This loan is received when pledging the owned property to purchase the new property. Mortgage loans are those that are available for a long period of time that is 15 to 30 years. The payments that you should make are distributed over the tenure of loan, the type of mortgage loan you select and also the interest rate decided.
To ensure that the borrower repays loan properly and that too at regular intervals, there are some aspects that the lenders generally examine before. The most crucial and main thing that needs to be kept in mind are down payments, monthly interest payment and many more. All of these will depend on the kinds of mortgage loans that you select. There are many types if loans and hence before you take one for your home it is vital that you know all so that you can take the correct decision.
Type #1
Fixed interest mortgage loan:
This is known to be the kind of loan in which interest payable is fixed. This means that each month the amount of interest needs to pay is known in advance. In such a case, you can even calculate the amount of expenditure that takes place every month including the repayment as well as interest payment. Hence, you can know whether you can afford to pay a particular amount monthly or not. This is known to be one among the common types of mortgage loans that people wish to take.
Type #2
Balloon mortgage:
This is the kind of mortgage that providers the borrowers low interest rate for particular period of time. This period usually varies between 5 to 10 years. After the time passes, the borrower should pay the entire amount of principal.
Type #3
Sub-prime mortgage:
This is the type of mortgage that is for people having low credit score. This means that the lender poses a high risk. To compensate on this aspect, the monthly payments and interest rates are high. Most of the lenders make money by this kind of loan. But if the borrower pays the due amount before the time then the lender should pay the prepayment penalty as well. This is one among the rare types of mortgage loan. This means not many people wish to take this mortgage loan.
