The different types of mortgages

[Holicent]

There are many different types of mortgages, and it's important to know what type your mortgage falls into before you apply for one.

Here are the main categories you can expect to see:

Conventional Mortgage: This is a fixed-rate mortgage, meaning that the interest rate will not change over time. Your loan amount is usually based on the value of your home.

Adjustable Rate Mortgage (ARM): ARMs normally offer a lower purchase price than conventional mortgages but higher monthly payments after you close on the house. Like conventional mortgages, they also have fixed interest rates.

Jumbo Loan: Jumbo loans are larger than other mortgages in order to build up equity in your home over time. They are also known as "super prime" loans because they offer extremely favorable terms and rates to borrowers who meet certain criteria. There are many different types of mortgages, and each type has its own set of pros and cons.

 

[Jasz]

There are three different types of mortgages: fixed rate, adjustable rate and interest-only. A fixed-rate mortgage is the most traditional mortgage in the United States. It will have a fixed interest rate for the life of the loan. The interest rate on a fixed-rate mortgage will go up when inflation goes up, but it will not change during the life of the loan.

An adjustable-rate mortgage (ARM) is also called a “conforming” loan because it meets certain requirements from Fannie Mae and Freddie Mac before they will purchase it. If you have an ARM with a fixed rate and your interest rate increases by 2% every year, this would be considered an ARM. You can refinance your ARM at anytime without losing any money except for closing costs.

An interest-only loan means that you only pay interest on this loan while you are paying off principal of other loans or credit cards. If you pay off all your other debts first and then make monthly payments on this loan, then you may still have enough money left over after paying off all your debts to pay for living expenses or anything else that comes along without having to worry about paying taxes on these funds until they are paid off.