By: Helena Topolova
With all of the different types of mortgages out there, it is difficult to know which one is the right one for you. Here is a quick rundown and brief explanation of a few different mortgages you should consider. Also remember, taking out a mortgage is only a good idea if you have the money to pay it, never take one out on the hope that someday you will be making enough to pay the payments.
A fixed rate mortgage is the most basic mortgage you will encounter on the search for the mortgage. The mortgage interest rates stay constant throughout the term of the loan. With the type you don't have to worry about the mortgage rates going up on you from month to month. You will know what your payment is going to be every single month.
An adjustable rate mortgage is almost opposite the fixed rate. With this the mortgage interest rate fluxgates based several different aspects of the market. This mortgage is better for the financial institution because it eliminates some of the risk for them, by ensuring if the mortgage rates go up, so do your interest rates. However, this type can lead to lower interest rates as well; in fact they often start a little lower than the fixed rate.
The adjustable isn't to be confused with the graduated rate mortgages, which also has changing mortgage interest rate; however these rates increase at a steady, planned rate. You will still know each payment before you get it, but it starts lower and get larger as you go on. Good for someone just started a new job or recently moved to a new area and are getting settled.
The final type we're going to address is the balloon payment mortgage. This mortgage may have mortgage rates that are fixed or adjustable, depending on the bank, but the catch is at the end of the term there is a balance you still need to pay. The monthly payments will be lower, but when the maturity date hits there is a large, usually quite large, payment due. This is mortgage is generally reserved for commercial use and can be dangerous for residential mortgages.
In the end if you still don't know what mortgage you should get, visit or call your financial institution for some mortgages rates or go online to find yourself a mortgage calculator.
About The Author:
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