Major Types of Mortgage Loans You May Want to Consider

a couple reading about a mortgage loan

Finding the right mortgage company in cities like Hendersonville is crucial to bring you one step closer to your dream home. They will assist you with what type of mortgage plan would fit your budget.

But before you go ahead and head on to the nearest home loan company in your area, you may want to review the basic types of mortgages to know which one is perfect for you.

Fixed Rate Mortgages

Fixed rate home loans are perfect for first-time home buyers since the mortgage interest rate is locked for a specific number of years (10, 15, 20, or 30) depending on your home loan. It’s ideal for home owners since interest rate won’t change even if the market rates fluctuate.

Adjustable rate mortgage

Adjustable rate mortgages are relatively lower compared to fixed rate mortgage at a particular period in your home loan’s timeline. The interest rates change over time, depending on the current market rates. However, home buyers do not need to worry about any sudden influx of mortgage rate increase.

The adjustment intervals are often predetermined, together with both minimum and maximum rate caps set to restrict the amount that is for adjustment.

Balloon mortgages

Balloon home loans are also much shorter than ARMs but are close to fixed-rate mortgages. The monthly payments are much lower for the first few months because of a lump sum of the balance you will pay at the end of the loan.

Balloon mortgages are ideal for home buyers who are expecting a lot of money in a few years or someone who intends to sell the property before the balloon payments’ due date.

There are other mortgage plans that you may want to consider when applying for a loan. That’s why it’s best to coordinate with your lender to know more about your options for your loan application.