Types Of Mortgage Loans
There are a number of types of mortgage loans that you need to know before you select to take for your home.
Mortgage loan is loan that is taken from banks or the private mortgage brokers or online brokers. This is the loan that is received after pledging the owned property to purchase the new property. The mortgage loans generally are available for a period of ten to thirty years. The payments that you should make are distributed over the loan period, the type of mortgage loan you select and also the interest that is decided on.
In order to ensure that the borrowers repay the loan amount properly and that too at regular intervals, then there are some things that the lenders generally examine before. The most crucial and main aspects that you should consider are the down payments, monthly interest payments and also more. All these aspects will depend on the types of mortgage loans that you select. There are many types of loans and hence before you choose one it is vital for you to know all the types in brief so that the right decision can be taken. Following are the type of mortgage loans that you should know before choosing one:
Type #1
Fixed interest rate mortgage loan:
This is the kind of mortgage loan in which the interest rates are fixed. This means that, every month the interest amount that you need to pay is known to you in advance. In such a case, you can calculate the amount of expenditure that takes place monthly and it includes the repayment as well as the interest payment. Hence, you can know whether you can afford to pay the particular amount monthly or not. This is the most common kinds of mortgage loans that people prefer to take.
Type #2
Balloon mortgage:
This is the kind of mortgage that gives the borrowers low interest rates for particular period on time. This loan period usually varies between 5 to 10 years. After the loan period passes, the borrower should pay the amount of principal.
Type #3
Sub-prime mortgage:
This is the type of mortgage loan that is meant for people having poor credit history. This indirectly means that lender poses higher risk. In order to compensate on this aspect, the monthly payments and also interest rates are higher. Many lenders generally make money by this kind of mortgage loan. But if the borrower pays amount that is due before a specific time, then the lender should pay pre-payment penalty to borrower.
Mortgage loan is loan that is taken from banks or the private mortgage brokers or online brokers. This is the loan that is received after pledging the owned property to purchase the new property. The mortgage loans generally are available for a period of ten to thirty years. The payments that you should make are distributed over the loan period, the type of mortgage loan you select and also the interest that is decided on.
In order to ensure that the borrowers repay the loan amount properly and that too at regular intervals, then there are some things that the lenders generally examine before. The most crucial and main aspects that you should consider are the down payments, monthly interest payments and also more. All these aspects will depend on the types of mortgage loans that you select. There are many types of loans and hence before you choose one it is vital for you to know all the types in brief so that the right decision can be taken. Following are the type of mortgage loans that you should know before choosing one:
Type #1
Fixed interest rate mortgage loan:
This is the kind of mortgage loan in which the interest rates are fixed. This means that, every month the interest amount that you need to pay is known to you in advance. In such a case, you can calculate the amount of expenditure that takes place monthly and it includes the repayment as well as the interest payment. Hence, you can know whether you can afford to pay the particular amount monthly or not. This is the most common kinds of mortgage loans that people prefer to take.
Type #2
Balloon mortgage:
This is the kind of mortgage that gives the borrowers low interest rates for particular period on time. This loan period usually varies between 5 to 10 years. After the loan period passes, the borrower should pay the amount of principal.
Type #3
Sub-prime mortgage:
This is the type of mortgage loan that is meant for people having poor credit history. This indirectly means that lender poses higher risk. In order to compensate on this aspect, the monthly payments and also interest rates are higher. Many lenders generally make money by this kind of mortgage loan. But if the borrower pays amount that is due before a specific time, then the lender should pay pre-payment penalty to borrower.
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