Many types of mortgages are available to suit the specific needs of borrowers. Interest only mortgages, fixed rate mortgages, adjustable rate mortgages, balloon mortgages and reverse mortgages are some of the popular mortgages.
Interest only mortgage loans allow the borrowers to pay only the interest on the mortgage, as a part of their scheduled payments. This type is available for a fixed term that is usually from five to seven years. After the term gets over, borrowers have to begin paying off their principal as well.
A fixed rate mortgage is a type of mortgage where the monthly payments remain the same throughout the term of the loan, as they are provided at a fixed rate of interest. Adjustable rate mortgages or ARM?s offer an initial lower interest than the current market rates.
Balloon mortgages are short-term loans with fixed interest rates and fixed monthly payments. Balloon mortgage loans usually offer a lower interest rate than the prevailing rate for a fixed term initially. After this term is over, borrowers are required to repay the full amount of the mortgage in one single payment.
Reverse mortgages are an option where the borrowers receive money from the lenders to live in the house. There are several ways to apply for these mortgages, such as contacting a lender directly or getting in touch with a mortgage broker. Every state has its own rules and compliance laws that lenders as well as buyers have to adhere to, in order to purchase a mortgage.