My Loans Consolidated

There are several mortgage loan types to choose from to realize the American dream of home ownership. There are 3 types that are the major mortgage loan types. These are:

1. Conventional mortgage loans
This type of mortgage loans are the simplest to understand and also the most basic. What you do is simply borrow money as much as a certain percentage of the price of your home. The price of the home is calculated by subtracting any downpayment from the sale price of the house and fees. When taking out this loan you agree to pay it back through monthly installments for a certain number of years.

2. FHA and VA loans
These kind of mortgage loans are backed up by the Federal Housing Authority and the Veterans Administration. The goal of these two groups is to help more people realize their dream to own a house. What they do is provide mortgage lenders with mortgage insurance to cover the balance in case the homeowner has to default their loan. This sounds tempting to take out, especially because this type of mortgage loan usually have a lower down payment and lower interest rates. Also, it is usually easier to qualify for some of the parameters of the loan. With the FHA and VA back up, mortgage lenders do not have much control over some of these parameters because the FHA and VA set these parameters of the loan. They set how much of the minimum down payment is, how much interest can be charged, inspections of the property, and so on. You may find that many mortgage lenders do not have this deal with FHA or VA. Offering conventional mortgage loan types would give them more control.

3. Fixed rate mortgage loan
This type of loan has an unchanged interest rate that remains throughout the life of the loan. As housing market and interest rates are low these days, it is a smart decision to get a lower rate now and keep it forever by applying for a fixed rate mortgage loan instead of a variable-rate loan. By having a fixed-rate loan will also help you budget your finances more easily as you will always know how much your payment is going to be.

4. Adjustable mortgage loan
As it can be more difficult to qualify for a fixed-rate loan, people have no choice than to take out the adjustable mortgage loan type. This type of loan begins with one interest rate but it does not necessarily remain the same until the end of the loan life. In order to suit market conditions, the interest rate can be adjusted periodically depending on the events happening in the economy and on what the prime interest rate is.

5. Unconventional mortgage loan
There are many other types of loans that are new to the home lending industry. Some of these types are interest-only mortgage loans, balloon mortgages, and even reverse mortgage loan types.

As you know all the different types of mortgage loans, make sure you look into all your options to find the one that best fits you and your family’s condition.

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