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Types of Mortgage

Mortgage refers to a loan that you get from a mortgage dealer such as a bank or a building society for a real property whereby the real property is held as the security to the loan till completion of the loan. Today, it’s almost impossible to own a good hone without having to take a mortgage, therefore, it’s important to understand how they work. When considering a mortgage there are various factors that influence the decision you make such as the type of mortgage, the fees, interest rates, and flexibility. Such factors are of importance since they largely influence the duration of completion of the loan payment and also the total cost of the loan. The type of mortgage whereby you are required to pay a constant interest rate for a certain period of time is referred to as a fixed rate mortgage. The extent of the duration by which your rates will be fixed can vary from one mortgage dealer to another or due to other factors such that when you are going to apply for the mortgage you might be told it’s a full fixed rate meaning till completion your rates will be constant or it might be fixed for a certain period of time maybe a year or two then from there you can change or remain with the same rates. With a fixed rate mortgage,you are able to make precise budget and make your plans for repayment with surety. Another type of mortgage based on the interest rates is a variable rate mortgage which comes in different types but one common thing about them is that the rates can change at any time. Hybrid ARMs or hybrid adjustable rates mortgage usually start off with a fixed rate then later switches to a variable rate. Government insured and conventional loan is another category for understanding the various types of loans. Conventional loans are not insured in any way or guaranteed any security by the government. There are varied forms od the government insured mortgage. Annuity mortgage is a common type of mortgage whereby the loaner will pay the monthly interest rate and a certain portion of the loan amount. The monthly repayments are therefore well planned to ensure the loan decreases as the time pogresses until it is eventually fully paid at the end of the loan repayment term. For you to understand exactly the type of mortgage exactly that you are going to be applying for, it is essential to consult the people who are giving you the loan so that you can be able to understand what you are about to do. With a mortgage you are guaranteed of owning a home in an affordable and convineniet way.

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