Types of Mortgage Loans for Potential Homeowners

When it comes to buying a house, taking a mortgage is inevitable for most homebuyers. Earlier from 2000 to late 2008, during the boom of real estate industry, buyers had exotic loan options to choose from as lenders were offering great loans at risky terms. However since then, lenders have returned to the safe environment of home financing.

Nowadays, there are majorly two types of mortgage loans that conventional buyers can choose from. They are as follows:

1.    Fixed Rate Mortgage: As the name suggests, with a fixed rate mortgage, your rate of interest on the loan remains fixed throughout the term of your loan and the repayment is split into monthly installments for the entire duration regardless of its length. During the initial years of this type of loan, only a small amount of principal amount is paid off and the majority portion of the monthly installments is used to pay off the interest. Fixed rate loans can be 10, 15, 20 or 30 years of duration.

2.    Adjustable Rate Mortgage Loans (ARMs): Unlike fixed rate loans, the interest rate on ARMs changes from year to year. The most prevalent type of ARM is Hybrid ARMs. A hybrid ARM comprises the qualities of both Fixed Rate mortgages and Adjustable Rate mortgages. In the initial years of a Hybrid ARM, the interest remains fixed and starts changing only after a pre-specified duration. Hybrid Mortgages can have anything from a three year to 10 year fixed rate interest period.

These are the two types of mortgage loans that are most common with potential homebuyers. All Western Mortgage offers best interest rates on both these types of mortgages. So, if you are on the hunt for mortgage purchase, call us on 702-850-2790 or visit our website – www.awmlending.com now.