Thinking about getting a mortgage? Well, this is a decision that is easier said than made. In modern times, there are a range of options to consider when trying to get a mortgage. There are numerous types of mortgage loans and each one has its own intricacies that have to be contemplated over. Let’s take a look at some of these different types of loans and what they are all about.
When contemplating over different types of mortgage loans, let’s begin with open mortgages. These mortgages are built around the idea of being able to repay the loan within any time frame and not be penalized for it.
These types of mortgages are generally on the shorter side of the term spectrum. These are smaller sums that can be paid in a shorter time span by an approved borrower.
The terms on these loans are generally higher because of how short and easy they are for the borrower to follow. There are minimal restrictions on the borrower and this is a major advantage for those who need an immediate flood of money into their account to pay off an expense.
These are the opposite of open mortgages as they have a fixed set of terms that have to be abided by. There are no opportunities to have the mortgage refinanced or renegotiated down the road.
Whatever has been established from the get go is exactly how the mortgage will play out. If the borrower cannot pay back the amount, they will be penalized on the spot.
There is no way of getting out from under the penalties with this type of mortgage. The better part about these mortgages is they come with easier terms because of how restricting they are in general.
High Ratio Mortgages
This is a type of mortgage that takes a peek at the down payment involved with the process and tweaks it. The borrower is allowed to pay less than 20% on the down payment when they are acquiring the mortgage.
These are those loans that have the protection of the FHA and the government. These are insured that if the borrower does not pay them back, the government will take responsibility. This makes it much more affordable for all parties involved and reduces the risk for the lenders.
Fixed Rate Mortgages
These mortgages have a ‘fixed rate’ assigned to them within the terms. Right when the mortgage is signed, then the fixed rate goes into effect. This is the rate with which the interest will accumulate regardless of what happens in the market. This can also allow for the borrower to repay the loan on their own accord and have the ability to pay it back in different ways. This can be a positive or a negative depending on the borrower and the market at the time.
Hopefully you now have a better idea about different types of mortgages. Now you can go out and get one yourself if you qualify. Use the information above to give you the help you will need when you hunt for the proper loan.