Types of Mortgages

 Fixed Rate Mortgages are familiar, conventional home loans. Rates and terms remain constant over the term of the loan (usually 15, 20, 25 or 30 years). The down payment often is anywhere from 3% to 20% down. The interest rate may be a little higher than some adjustable-rate mortgages, but the borrower is assured the mortgage amount will not increase.  

VA and FHA Mortgages are guaranteed by the Veterans Administration and the Federal House Administration. VA mortgages are made to veterans, with little or no down payment. FHA insures first mortgages, enabling lenders to make loans at a higher percentage of the sale price than they otherwise might be. VA and FHA mortgages may require private mortgage insurance.

Adjustable-Rate Mortgages allows interest rate changes at agreed, pre-determined periods. Rising or falling rates are keyed to a financial market index. While rate increases are at the lender's option, decreases are mandatory. Many lenders put caps on rates and payment. Initial rates often are lower than conventional loans.  

Assumable Mortgages permit the buyer to assume the mortgage obligations of the seller. The down payment is the difference between the new purchase price and the existing mortgage balance. The interest rate on that particular loan remains the same.  

Bi-Weekly Mortgages are fixed-rate mortgage loans that require payment of principal and interest every 14 days. This reduces the debt installments of principal and interest with the monthly payment of a 30 year fixed-rate mortgage cut in half and paid every two weeks. Since most months are longer than every 28 days, the homebuyer ends up making 26 or 27 payments and makes the equivalent of an extra payment every year. By taking a straight 30 year fixed monthly mortgage and making one or two extra payments a year the borrower would have the same effect as the Bi-Weekly mortgage.

Balloon have lower interest rates and monthly payments than fixed-rate loans. Best for borrowers who plan to move or refinance within the loan term. May allow conversion to a fixed-rate loan at term's end. Term: 5-7 year loans, amortized over 30 years. Repaid in equal monthly payments plus a "balloon" payment for the remaining balance. 

 FHA Mortgages @ AFR

 FHA Mortgages @ AFR