Home » Finance

Types of Home Mortgage Loan That You Should Be Aware

Aug 28, 2008
Home Mortgage Loan can be fixed rate or adjustable rate. Your manner of choosing is dependent on the kind of borrower you might be.

There are different types of home mortgage loan, however most of them fall under two categories: fixed rate and adjustable rate. To go either fixed or adjustable rate home mortgage is just a matter of how you personally want it to be. However, to make a wise decision, you must try to have a good grasp of the difference between these two types of loans. We will discuss the advantages as well as disadvantages of fixed rate and adjustable rate type of loans.

Fixed Rate Loans: Advantages

Remember that fixed rate loans have interest rates that remain the same even with major changes in the economic situation. And even if the interest rates increase, your mortgage will not change. Fixed-rate home mortgage loan is ideal for a borrower who needs to know how much his loan payments will be every year. This makes him assured that he know how much his financial obligations are in the long run and allows him to be ready for payments. The fixed rate type of loan is the best choice for someone who hates taking financial risks. Likewise, with fixed rate loans, this allows you to remain in you property for a long period of time.

Fixed Rate Loans: Disadvantages

One disadvantage of fixed rate loan is that if the interest rate significantly decreases during the period of the mortgage loan, then the borrower will be on a serious disadvantage financially. One way for the borrower to counter such negative effect is to go through mortgage refinance and get a much lower interest rate. It may actually become a financial burden especially if the person is experiencing serious debt problems or if the value of the house has markedly decreased. The total cost of fixed rate loan is likely to be higher than that of an adjustable rate loan in the event of a decrease in interest rates.

Adjustable Rate Loans: Advantages

Adjustable rate home loan on the other hand is ideal of those who are not afraid to take risks. Adjustable rate loans fluctuate with whatever situation the economy is at the moment. And if rates drop, this is to the advantage of the borrower, as significant amount of savings can be earned. Risk takers who are contemplating on getting a home mortgage loan decide on getting adjustable rate type especially if they believe that the current interest rate is going down. Likewise, adjustable rate loans are great for those who do not intend to stay long in their property.

Adjustable Rate Loans: Disadvantages

A disadvantage of adjustable-rate home mortgage loan is the ever present danger of the interest rate of going up without any increase in the borrower's income or other financial source to counter its negative effects. Therefore, it is ideal that a rate cap is place when going for adjustable type of loan in order to you to make sure you are still able to conveniently maintain your loan.
About the Author
Visit the web site found at http://www.homemortgageloan-refinance.com for interesting information about different types of loans, including a Home Mortgage Loan or Home Mortgage.
Rating:
Please Rate:
(Average: Not rated)
Views: 156
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources