Six Types of Mortgage Loans Affect Repayment

Whether your parents owned the home you grew up in, or just want to enjoy the family stability of home ownership, you've looked forward to walking through the front door and being surrounded by four walls that belong to you. You've worked long hours and took on all the extra hours you could, in order to save for your down payment. You prepared for the challenges ahead with your wages, savings, and budgeting because, you know from family and friend experiences that in home ownership that some times when it rains it pours. So you've even studied up on home maintenance so that in between inspection, professional repair or necessary replacement, you'll be able to take care of the home that's taking care of you. Yet, in the midst of all of your preparations you understand that your down payment is only part of what will get you to home ownership. You require a loan in the amount of the difference between the purchase price and your down payment. Upon credit approval and your agreement to equitable repayment conditions, you will repay mortgage loans over a set amount of years (15 or 30) and this is known as your mortgage. There has been a little confusion in recent years over home ownership. But with the house crisis, you understand that much like car loans, the vehicle and home, in this case, belongs to whomever has paid in full, that is, the bank and once you've paid the bank in full, you are an official home owner.

Like any other loan you encounter in life, mortgage loans' effect on your debt and property ownership is determined by the terms of the loan. Therefore, mortgages come in different forms to represent different repayment options. For instance, the types of mortgages available are the fixed rate, adjusted rate, balloon, interest only, bi-weekly and bi-monthly loan repayment options. The most plain and straightforward option is the fixed rate because you're repayment will never change for the life of your 15 or 30 year plan. You can also a biweekly or bimonthly option to split your payments each period or take up to a month of payments off of the life of your loan. On the other hand, adjusted and balloon options present the greatest risks to families with unpredictable income. Much like the interest only option the initial payments are as low as they will ever be, and these lower payments only last for a short amount of time, after which the payments will either adjust with the market, balloon or gradually increase over time without a cap, or for the interest only option increase with the addition of payment to the principle of the loan.

It is critical that you take the time with the employed members of your household to discuss the right options for you. You will have to live with the terms that you choose in order to reach your goal of home ownership. Over two-thirds of potential home owners go with the dependability of the fixed rate mortgage loans option. Yet, there are several choices and applicable terms available to suit those who want to reach home ownership as soon as possible as well as choices for those who don't want to tempt the fate of their financial stability but continue to work hard to achieve their homeowner status by the expiration of their loan repayment.