Types Of Mortgage Loans

When it comes to purchasing a home, most homebuyers resort mortgage loans. This is very common these days to help people own their dream home while still be able to provide for the needs of their family. There are actually at least three types of mortgage loans that homebuyers can choose. Check out the following:

- Fixed rate home loan. This is the type of loan with an interest rate that stays the same until the loan is paid off. This usually goes up to 10-30 years, depending on the preference of the homebuyer.

- ARM or adjustable rate mortgage. This type of loan has an interest rate that changes yearly. For the first few years, this works the same as the fixed rate loan but later on, it will be adjusted depending on the value of one-year Treasury bills and index and margin.

- Interest-only loan. This type of mortgage loan is best for those who do not have a steady source of income. Homebuyers can pay the interest first, for the first few years ( 5, 7 or 10 years) and then they pay the principal and the interest with a rate that’s adjusted annually.

Trivia Info Resource: www.brighterfinance.com.au