Types of Mortgage Loan

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There are various types of Mortgage Loan available. You are to decide what is the need of taking the loan, and which one is best suited to you. For this reason you must need a fairly idea about all kind of Mortgage loans. Here I will discuss shortly about them and will try to give a fair idea.

Types of Mortgage Loan:

1) Fixed Rate Mortgages

2) Adjustable Rate Mortgages (ARMs)

3) Reverse Mortgages

· What is Fixed Rate Mortgages (FRM) ?

It is that kind of Mortgage where you are to pay a fixed rate of interest. It will offer you security as during the term of your loan the rate will not change. It will also give you peace of mind and will allow you to plan ahead for your future.

It is good for the first time buyers and also for those who need stability on their monthly repayment. You can make your budget according to your plan if you opt for FRM.

· What is Adjustable Rate Mortgages (ARMs) ?

Adjustable Rate Mortgage, also well known as ARM is a Mortgage which is directly related or linked with Economic index. Your interest rate and payment will adjust periodically according to the change of the Index. The lenders use the Index as a guide to measure the changes of interest rate. Every ARM is linked to a specific index.

· What is Reverse Mortgages ?

It is a Mortgage which is used generally by the seniors ( 62 and over in the USA ). It is calculated on the basis of HOME EQUITY i.e. the value of home, minus the amount of any existing Mortgage. It can be given to the owners by the lenders either one payment or monthly cash payments. Repayment of this loan to be continued till the owner is alive.