The reality is that most people cannot afford to buy a home without taking a home mortgage loan from a bank or other financial institution. There are many mortgage options out there, but when you are inexperienced, home buying can easily immobilize your thought since you are not only looking at hundreds of thousands of dollars, it also involves a long-term commitment. Below you will find many wheda options for a home loan so that you can find what is best for your needs.
The fixed rate mortgage is one kind of mortgage that carries the same interest rate for the whole term of the loan. The monthly payment for a fixed rate mortgage is the same for the number of years in the agreement terms with the bank of lending institution. To compute, you simply divide the number of years in your loan term and then add the interest proportionately. So if your term is long, your monthly payments will be lower, and the shorter the term the higher the monthly payment, and this is because you are paying off your loan in a certain time period.
The second type of home mortgage is the adjustable rate mortgage or ARM which is also long term but the rate is not fixed but is affected by the interest flow in the market. These mortgage loans can begin with fixed rate at the outset and then switched to adjustable rate corresponding to market value, or it can also be starting with adjustable rate then end up with fixed in the years after. The hybrid arm can be a 5/1 ARM meaning 5 years term for fixed rate or adjustable, and hen 1 year terms for adjustable or fixed.
Another type of wheda loan option is the Convention Loan. The government is backed by these types of loans. The common name used for this loan is the government-insured loan because the government ensures the payment in case the lender in unable. This includes VA loans, FHA loans, and the USDA/RHS loans. The veterans get VA loans, and the FHA is given by the Federal Housing Administration and managed by the Department of Housing and Urban Development. Those who qualify for this loan has a very low down payment but they have bigger monthly payments. The USDA/RHA loan is from the USDA and overseen by the Rural Housing Services and allows borrowers with low income and those that come from rural areas. This administration can also encourage those who have trouble getting loans from financial institutions.
For further reading/watching, please visit http://www.ehow.com/how_5485951_process-mortgage-loans.html .