What types of mortgages are there?
There are 2 basic types • Fixed interest rate with fixed monthly payments These include 30-year and 15-year terms. The 30-year mortgage usually offers the lowest monthly payments, with a fixed monthly payment schedule. The 15-year allows you to own your home in half the time and for less than half the total interest costs of a 30-year loan. These loans also often require higher monthly payments. • Adjustable (ARM) with variable rates and changing monthly payments. These are mortgages with changing interest rates and/or changing monthly payments. The adjustable rate mortgage (ARM) is probably the most common, and there are many types of ARM loans available. An ARM usually offers interest rates and monthly payments that are initially lower than fixed rate mortgages. But these rates and payments can fluctuate annually according to changes in a pre-determined “index” commonly linked to the rate of return on U.S. Government Treasury bills.
