Types of Loans
Each lender/financial institution has their own mortgage products, but they usually fall into these categories:
- Fixed-rate mortgage – Interest rate remains the same for the life of the loan providing you with a stable and predictable monthly payment.
- Adjustable-rate mortgage – Interest rate is flexible and subject to adjustments—either on specific dates (3-, 5-, 7-year adjustments) or based on market conditions. An adjustable rate mortgage may provide you with a lower rate in the beginning of the loan; however, the payment may increase over time.
- Government guaranteed mortgages – Both the Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) offer loans to help homeowners with income restrictions or those who are currently in the military or a veteran respectively. Typically these loans have lower down payment requirements and less restrictive qualifying guidelines, but they do require you to meet certain criteria. Always check with the FHA or VA for complete details and if you think you may qualify for this type of loan, inform your lender.