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.

---

Council Right to Buy Mortgage ? Helping Everyone Have a Home of

"We will help every Council Tenant to become Home Owners"... Read More

Cardinal Principle of Homeowner Personal Loans ? It is a Solution for Any Sort of Financial Funding

You bought a house and you were promoted to the... Read More

Home Equity Loan ? With a Reverse Mortgage, Your Home Pays You!

The home equity loan has become quite popular in the... Read More

Online Mortgage Brokers - What You Might Not Know About Home Loans & The Internet

You may think that applying online for a mortgage is... Read More

Homeowners? insurance: The mortgage connection

A home owners' insurance is the cover for the house... Read More

Mortgage after Bankruptcy - Bankruptcy Discharged Yesterday? Purchase a Home Today!

So you have been through a bankruptcy and surely have... Read More

Understand a Real Estate Appraisal

Happy New Year. Make a difference this year. "Pay it... Read More

10 Questions To Ask Your Mortgage Rep or Banke

This post is a must read for anyone considering purchasing... Read More

Refinancing Your Mortgage Can Really Save You Money

Refinancing a mortgage is simply taking out a new mortgage.... Read More

Home Loan Refinancing - What Lenders Dont Want You To Know

Refinancing lenders seems to hold all the cards. They have... Read More

5 Home Buying Essentials

Purchasing a home involves certain important, even essential, steps that... Read More

Composite Credit Report Score Simplifies Mortgage Issues

Do you want a mortgage loan for your new home?... Read More

FHA Home Mortgage Purchase or Refinance Loan - Why You Might Consider Getting an FHA Loan

Most borrowers have heard of FHA home loans. They are... Read More

Guide to Remortgages

Here is a useful guide to remortgages. What is a... Read More

Home Equity Loans: A Useful Financial Tool

The investment need of an individual varies with time. Thus... Read More

Home Loans: What You Should Know!

Finding home loans can be a daunting task, whether you're... Read More

Change in Texas Law May Make Reverse Mortgages More Popular

Texas was one of the last states to allow homeowners... Read More

Buying a Home With Bad Credit - Tips on Finding the Right Broker or Lender

You can buy a home with a bad credit record;... Read More

Home Mortgage Loan Refinancing Online - 3 Tips on Refinancing Your Home

When refinancing your home, it's helpful to know a few... Read More

Hard Money Loans - Reasons Why You Might Want To Try Applying With A Subprime Mortgage Lender

Before you apply for a hard money loan, try applying... Read More

Tips On New York Mortgage Refinance Loan

Many homeowners want to know if it worth taking a... Read More

Home Buying ? What Can You Afford?

Okay, you've decided to buy a home and are trying... Read More

Home Loans For People With Bad Credit - Tips To Getting Approved Online

Buying a home with bad credit doesn't have to stop... Read More

Why Get Pre-Approved For A Mortgage?

One of the most important steps in the home buying... Read More

Home Equity Loan Risks

Home equity loans give individuals a tool to extend their... Read More

Bad Credit Home Loan - Apply Online and Keep Your Credit Score as High as Possible

If you have a poor or bad credit history with... Read More

Refinancing Your Home - Is the Time Right?

Refinancing your home is a major decision not to be... Read More

Repayment of Loans ? Lessening the Bitterness of the Process

So how have you planned the repayment? Don't tell if... Read More

Refinancing vs Line of Credit

Refinancing vs line of credit are two popular options you... Read More

How Much Home Loan Can I Afford?

Have you ever asked yourself how much home loan can... Read More

Mortgage Brokers or Banks: Which is Right For You?

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

Why Choose a Home Equity Loan?

There are many reasons for choosing a home equity loan.... Read More

Bad Credit Mortgage Loans ? How To Get Approved

Persistence is the key working toward getting approved for a... Read More