There are a plethora of mortgages out there and figuring out which one might be best for one’s financial situation can be intimidating. If one finds themselves with the wrong type of mortgage, managing mortgage debt can be very difficult. Here is a glimpse at some of the different types of mortgages that are available.
Types of Mortgages
A fixed rate mortgage is the most basic type of mortgage available. It’s a home buyer’s loan granted for a period of years at a specific interest rate. The rate remains the same for the duration of the loan.
An adjustable rate mortgage, unlike a fixed rate mortgage, has an interest rate that changes. One major drawback to adjustable rate mortgages is that they hurt one’s chances at mortgage modification later because they often contain clauses that penalize homeowners for pre-payment since the interest rate is determined by the principle rate due.
FHA and VA Loans
These are special government sponsored loans that help would-be home buyers who might not otherwise be able to secure a home loan realize the dream of purchasing a home. FHA loans are most commonly pursued by first-time home owners while VA loans are reserved exclusively for those who have served in the armed forces.
Mortgage professionals who are unsure of the best mortgage option determine the right mortgage for them. They can also offer advice on how to get the best terms and interest rate by managing credit debt and reducing the overall amount owed to creditors.