Even though mortgages are one of the most complicated topics for home buyers to comprehend, this article breaks down some of the more common types of loans. From fixed-rate loans to government loans, there is a loan type for every person who is trying to purchase their first home or move up to a bigger, better one.
What Is A Mortgage Loan?
Mortgage loans are a type of loan that allows homeowners to borrow money against their home's value. The borrower typically pays the lender a set amount of interest each month, plus any principal and interest owed on the loan. Mortgage loans come in many different types, based on how much money you can borrow, how long you have to pay it back, and what the terms are. You can browse online or get the best Home Mortgage Loans and Refinance Lenders in Elk Grove, CA through Sumer Home Loans.
Here are four common types of mortgage loans:
-Fixed-Rate Loan: A fixed-rate mortgage loan has a set interest rate for the entire loan period. This means that your monthly payments will always stay the same, no matter how much interest rates rise or fall.
-Variable-Rate Loan: A variable-rate mortgage offers borrowers a chance to lock in a fixed interest rate for a specific period, but then has the option to change the rate during that period. If interest rates rise above your initial rate, your payments could go up. If they fall below your initial rate, your payments could go down.
-Convertible-Rate Loan: A convertible-rate mortgage allows you to switch between fixed and variable rates during the life of the loan. If you decide later on that you want to switch to a fixed rate, you have the option to do so.
-Adjustable-Rate Loan: An adjustable-rate mortgage allows you to lock in a fixed interest rate for a specific period, but has the option to change the rate during that time. If interest rates go up, your payment could go up and if they fall, your payments could go down.