Most popular home loan; see the pros and cons of the year fixed-rate mortgage. Your interest rate never changes ; see the basics of fixed-rate mortgages. Lower monthly payment than with shorter-term loans. Best for: Home buyers who want the lower monthly payment that comes from stretching out repayment over a long time. The fixed rate makes the payment predictable. A year fixed offers flexibility to repay the loan faster by adding to monthly payments.
The year fixed-rate mortgage has an interest rate that remains the same over its year term. Often used for refinancing ; see the pros and cons of the year fixed-rate mortgage. Interest rate is set for the life of the loan. Lower interest rate than with longer-term loans. Higher monthly payment than with year loans, with less total interest paid. Best for: Refinancers and home buyers who want to build equity and pay off the loan faster.
Payments are predictable because the interest rate doesn't change. Because the borrower pays interest for fewer years, total interest payments are less. See the pros and cons of adjustable-rate mortgages. Initial rates can often be locked for one, five, seven or 10 years. FHA loans are backed by the government and designed to help borrowers of more modest means buy a home. See how FHA loans differ from conventional mortgages.
Allows down payments as low as 3. Credit scores as low as can qualify. Learn more about the credit score needed to buy a house. Mortgage insurance premium payments are required. VA loans are mortgages backed by the Department of Veterans Affairs and are available to military service members and veterans. See how VA loans work and who qualifies. No down payment required. Payoff, Inc. Before you get a mortgage, make sure you know the eight mortgage types?
The Basic Types of Loans 1. Interest-Only Mortgage Interest-only mortgages give you the option, during the first five or 10 years, to pay only the interest portion of your monthly payment instead of the full payment. Special Assistance for Certain Groups 4. VA Loans These loans make it easier for veterans of the U.
More Exotic Types of Loans 6. Balloon On a balloon mortgage, you pay interest only for a certain period of time — five years for example — and then the total principal amount is due after this initial period.
In addition to these common kinds of mortgages, there are other types you may find when shopping around for a loan. These include:. Before moving forward with any mortgage, carefully consider your financial situation. Review your circumstances and needs, and do your research so you know which types of mortgage loans are most likely to help you reach your goals.
How We Make Money. Miranda Marquit. Written by. Miranda Marquit is a contributing writer for Bankrate. Miranda writes about topics related to investing, saving and homebuying. Edited By Suzanne De Vita.
Edited by. Suzanne De Vita. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Reviewed By John Stearns. Reviewed by. John Stearns. Share this page.
Bankrate Logo Why you can trust Bankrate. Bankrate Logo Editorial Integrity. Key Principles We value your trust. Bankrate Logo Insurance Disclosure. Read more From Miranda. About our review board. You may also like New VA rules aimed at curbing predatory lending for cash-out mortgage refinances. Unpaid federal workers can sidestep rules to apply for cash-out mortgage refinance. Mortgage rates crush it again, plunge to a new all-time low.
Rates expected to jump on Fed Day.
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