Different Types of Mortgages

When you buy a home, you must also consider what type of mortgage you should get. There are various different types of mortgages available that you can use to finance you home purchase. Below is a list of the most commonly used mortgage plans.

When people first think of a mortgage, they are usually thinking of the conventional fixed rate mortgage option. This is a mortgage in which the interest rate stays constant for the duration of the loan. In most cases, the payment is structured to be paid back in a 15 or 30 year period.

Another popular option is an adjustable rate mortgage. These are set up to similarly to fixed rate mortgages except they allow the interest rate on the loan to change based on the market interest rate. Every 6 to 12 months the interest rate may change which makes your future payments a bit less predictable.

Some people qualify for government backed mortgages. The Federal Housing Administration has a mortgage option for low income families, the Veterans Affairs department offers mortgages to veterans of United States Military, and the US Department of Agriculture has some mortgages available to those in rural areas.

Balloon mortgages are a short term mortgage options in which lower regular payments are made up to a certain date when a final larger payment is due.

Interest only mortgages allow you to only pay the interest on the loan for awhile before actually paying pack the loan. A downside of this is that you will have larger payments later.