MortgagesThere are many different types of mortgage loans out there and it can be very confusing trying to understand all of the descriptions. Through out your research you may come across six different types of mortgage loans that are easy to understand once they are broken down.
The first is a fixed rate mortgage loan. The meaning of this loan is basically in the name. It is a loan with a fixed interest rate for the life of the loan. This is a good loan for you if you know you can make consistent payments and you do not have to worry about the interest changing all of the time.
The second is called an adjustable rate mortgage loan or AMR. This loan gets just a little more complex. This is a loan that has and adjustable interest rate, according to the current mortgage index. You can start of with low interest rates/payments and move up to higher ones. Also, you can start off with a fixed rate that turns into an adjustable rate. There are many ways this loan can go, but you get the basic definition of it.
The third is called a balloon mortgage. This is probably one of the more popular ones with people who want to refinance or sell their home in a time period. This loan will start you off a set number of years with a fixed rate loan then when those years are up you have the pay the rest in full with one payment.
The fourth type of loan is called a two step mortgage. This will break your loan into two parts. The first seven years will be a fixed rate loan then your interest is adjusted to something different for the remaining term of the loan.
The last two types you will see is a conforming and a jumbo loan. These are loans that have federally set limits, meaning, you can't go over a certain amount of money when applying for a loan. This is for the people who have the choice of how much money they want to put down on a house. The limit for the conforming loan is $417,001 if it goes above this you have to get a jumbo loan.