Types of Mortgages: Basics

**DerrickSakai** · 01-13-2011, 09:11 AM

When mortgaging or refinancing property, there are three types of mortgage options that you can choose from. These are the three basic mortgage options:

Fixed Rate Mortgages
Adjustable Rate Mortgages
Baloon mortgages

Here are a short description of each of the three mortgage types:

Fixed Rate Mortgages: This is what the name suggests, a fixed rate mortgage. The amount of the interest is decided at the time of the loan, or before the time of the loan. The interest rate remains the same for the period of the mortgage.

Adjustable Rate Mortgages: Often known as ARM, this kind of mortgage has a fixed amount of interest for a short period of time(usually from 6 months to 5 years) and then the rates change according to the current market interests. In this process, the lender uses an index, and this adjustment varies based on the lender's policies such as the duration of a single adjustment or the amount. To know more about ARMs, visit this article.

Balloon Mortgage:It's a bit similar to the ARM, because it has a fixed interest rate during a fixed amount of time, except the entire balance of loan becomes due at once after that fixed period of time.

Every loan system has it's own pros and cons and the choices for which one you wish to choose is exclusive to your particular circumstance.

**Waterfront Specialist** · 02-14-2011, 10:30 PM

Thank you for this great information, very useful article.......

An “adjustable-rate mortgage” refers to a loan program with a variable interest rate that can change throughout the life of the loan. It differs from a fixed-rate mortgage, as the rate may move up or down depending on the direction of the index it is associated with.

All adjustable-rate mortgage programs come with a pre-set margin, and are tied to a major mortgage index such as the Libor, COFI, or MTA. Some banks and mortgage lenders will allow you to choose an index, while many rely on just one of the major indices for the majority of their products.

**myplace_11** · 07-12-2011, 04:04 AM

Really useful information. thanks

**Carla Hailey** · 07-12-2011, 05:21 AM

Very informative. Great factors to consider when looking for a mortgage. Studying the type of home loan that best fit you, plays a major role in the process of actually owning or buying house.

**richardcler** · 10-17-2011, 12:50 AM

Thanks for sharing this types and one another type is repayment mortgage. A mortgage where you pay so much, interest on the loan and capital repayments. Most mortgages are repayment mortgages. This means that the end of the term of your mortgage you will pay your mortgage debt.

**mikesmith** · 10-17-2011, 04:09 AM

Best mortgage loans are those where you get low interest rates and grace period of at least six months.

**Albert L.** · 10-24-2011, 11:43 PM

Great information, Whether you are looking to finance your home, commercial property, investment property or to renegotiate a current mortgage, CLV Financial Services is the right place to turn.

**jamescharls123** · 03-07-2012, 05:12 AM

I think Fixed Rate Mortgage is not much efficient for everyone due to the higher initial rates of it.

**Scintillion** · 03-13-2012, 07:56 AM

Overall, I am a fan of fixed rate mortgages simply due to the fact that you are able to plan your finances accordingly - whereas the others, while offering a lower initial investment, increase your risk on the back end with unforeseen circumstances. Like you said, it's all according to an individual's situation, expectation, and finances.

**patty jones** · 03-16-2012, 04:57 AM

Mortgage loans are of various types as given in the top most post , some terms are very important in mortgage loans like interest, term, payment amount and frequency prepayment etc.If anyone having some important knowledge then please post to the thread .