What are the Different Types of Mortgages?

Published by julia | Filed under Buyer / Seller Tips, Market Trends, Pinellas County Homes, Real Estate

So, you are planning to buy your perfect house or commercial property, but don’t know what your options are in the mortgage department. You’re not alone. There are so many different types of mortgages available that it can be confusing to know what type is right for you. Each type of mortgage is tailored to a specific need. If you have a great job and money isn’t an issue, you can make higher payments and possibly pay off your loan in as little as 10 to 15 years. For many people though, money is an issue and they need to plan their budget tightly.

Most mortgages differ in just a few ways. They may require balloon payments up front or toward the end of the loan period, or your payments might change monthly based on fluctuating interest rates. Fixed rate loans are very popular because you are guaranteed to have the same bill every month regardless of interest rates. If you are on a budget, this is a great option.

Adjustable rate loans differ from fixed rate because they fluctuate with current interest rates. If you’re lucky, your lender will include a cap on the amount of monthly payment you’ll have to make, so you won’t be paying twice as much as the month before if interest rates go way up. Not every lender includes a cap, though, so make sure yours does before getting into an adjustable rate mortgage.

These are just a couple of the most popular types of home loans. If you plan on getting a commercial loan, you will have many more mortgage types available. Some of these have very low payments for the first year, until your business is established, and they the payments increase so you can pay the loan off quickly and get on with the business of operating your business and making a profit. The best bet is to research the different types of mortgages you are interested in and discuss them with your broker. Then you’ll know exactly which type you should apply for, and which will likely work best for you.