Getting the right type of real estate home loan is an important part of the home buying process. Below is some basic information regarding the types of real estate home loans that are common in the market today.
Fixed-Rate Mortgages Fixed rate mortgages are mortgages where the interest rate stays the same for the entire term of the loan. The advantage to a fixed rate mortgage is that if you lock a relatively low rate, your payment won’t go up when rates do.
Adjustable-Rate Mortgages With an adjustable rate mortgage (ARM), the interest rate of the loan can change throughout the term of the loan. This is one of the riskiest loans, especially for buyers on a fixed income, because after a certain period of time, your monthly payments can dramatically increase. It's even speculated that ARMs caused the 2008 financial crash. Fortunately, ARMs are now a lot different (and safer) than they were back then, but they are still pretty risky.
Hybrid Loans A hybrid loan combines a fixed period along with an adjustable component. Usually these loans are fixed for a period of time and then the loan becomes adjustable where it is dependent on current rates.
FHA Loans An FHA loan is a loan in the United States that is insured by the Federal Housing Administration.
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