Home Mortgage Loan Information - Which Type of Home Loan is Best For You?

If you are considering buying a home, then you may be more than a little confused by all of the terms you hear about home loans. After all, lenders throw around words like fixed rate, balloon mortgages and adjustable rate mortgages without a thought. But if you aren't at least familiar with the basics-those terms can be pretty confusing!

Here's a basic guide to the three most common types of home loans. Study it, and determine which one is right for you.

Fixed Rate Home Loan

If you are thinking about buying a home and staying in it until you pay it off, then you will probably want a fixed rate home loan. With this type of loan, you will be assigned a fixed interest rate, and then that rate will not change for the life of the loan. If interest rates skyrocket, yours will remain the same. On the other hand, if they plummet, you will likely be paying a higher rate. (You can always refinance in order to get a lower rate.)

Adjustable Rate Mortgage (ARM)

The interest rate with this type of loan goes up and down with the market. In other words, if the interest rate is low, the rate on your home mortgage will be low, but if it's high, your loan interest rate will reflect it. And because the interest rate on a home mortgage loan affects the payments, you will never know from reporting period to reporting period what your monthly mortgage payments will be. This type of loan obviously isn't for everyone.

So, who might use an ARM? For starters, if you are purchasing a house for investment purposes and plan to sell it quickly, you might take advantage of low interest rates by getting this type of loan-particularly if it looks as if they may go lower. Another reason to use an ARM as a home loan is if you are buying a home in a time when interest rates are on the decline. You can take out an ARM, and then change it to a fixed loan once the interest rates bottom out.

Balloon Mortgage

With this type of loan, you will make monthly payments for a fixed amount of time, with a fixed interest rate. The difference is that at the end of the payment schedule, you will owe the unpaid balance in one lump sum. If you use a balloon mortgage, you will find that the interest rates are much lower than either a fixed rate mortgage or an ARM.

The obvious negative to this type of loan is that huge payment due at the end, but if you are planning to hold the house for a short period of time, then this might be the loan for you.

By understanding the various types of home loans that are available to you, you will be better prepared to make a decision that is just right for you and your family.

To view our recommended sources for home mortgage loans, visit: Recommended Home Mortgage Lenders Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website with articles and the latest news about various types of loans.

---

Finding the Best Mortgage Lender Online

Finding the best mortgage lender online is simply a matter... Read More

Uk House Price Increases Take A Summer Holiday

Property website Rightmove has released its latest house price index... Read More

The Best Tactics for Getting a Quick Homeowner Loan

Trying to find a quick homeowner loan can seem difficult... Read More

Home or Investment Property Equity: Be Sure the Bank Gives You All that You Deserve

Home equity is your own personal money machine. If you... Read More

How a Commercial Mortgage Can Help Your Business

A commercial mortgage or commercial remortgage is a business loan... Read More

Selling Your Business Note

Before I go further, let me ask a question- if... Read More

Guide to Mortgages

A mortgage is a loan that is guaranteed by a... Read More

Home Loans and Mortgages ? Tips to Avoid Foreclosure

Today's real estate market is a volatile one; prices are... Read More

Mortgage Brokers or Banks: Which is Right For You?

When you're looking for a home loan, you might work... Read More

Council Right To Buy Mortgage ? Transform Your Accommodation Into Home

Homeowner - does this term catch your attention every time... Read More

How to Find a Direct Homeowner Loan

If you've been thinking about applying for a direct homeowner... Read More

Low Income Home Loans - FHA and VA Mortgage Loans Can Help You Get Approved

If you have low income and are looking to get... Read More

Remortgages Guide

Outlined below is a useful remortgages guide. Remortgaging has become... Read More

How to Get the Best Mortgage

This is a guide on how to get the best... Read More

How to Find Cheap Home Improvement Loans

If you have home improvements that you'd like to see... Read More

Refinance After Bankruptcy

Refinancing your mortgage after bankruptcy is actually the same as... Read More

A Personal Mortgage Experience

I don't know what the mortgage situation is around the... Read More

Home Equity Loan ? Still a Better Idea Than a 401(K) Loan

Anyone who borrows money is always looking for the cheapest... Read More

Home Loans: Where Do I Begin?

So you've finally decided you've had enough of paying rent... Read More

Getting The Best Rates On Mortgages And Loans

With an impending up-grade to the family due in a... Read More

Find the Best Mortgage Company

If you do not wish to commit to living in... Read More

Mortgage Info You Can Actually Understand!

This is a great time to Refinance Your Home or... Read More

The Top 5 Reasons to Buy a Home

1. Save on your income tax.Yes, something good can come... Read More

Types of Home Equity Loans

There are at least two types of home equity loans.The... Read More

Option ARM ? The World?s Most Dangerous Mortgage

Home prices have reached record levels, and in many parts... Read More

Poor Credit Home Mortgage Loans - The Role of the FICO Score

If you have bad credit history and are looking to... Read More

Reverse Mortgages ? A Tax Free Income For Senior Citizens

I fully realize if it sounds too good to be... Read More

Avoiding Foreclosure

If you fall behind in your mortgage payments, you face... Read More

Build Your Own Dream House!

So you're thinking about building your own house, are you?... Read More

How To Get The Best Home Equity Loan

Are you wondering how to get the best Home Equity... Read More

Home Equity Loan ? When Does Refinancing Make Sense?

For the last two years, interest rates have been much... Read More

Home Mortgages: How About Those 1.75% Loans?

You've undoubtedly heard or seen ads for mortgages with very... Read More

Selecting the Right Mortgage for You

A mortgage is a loan you take out to buy... Read More