In the early 1970’s, there was only three types of loan programs available to home buyers. There was only a fixed-rate conventional mortgage, an FHA loan or a VA loan. Now, times have definetly changed, there is an overwhelming number of mortgage loan types. These are listed below, with a brief description.

Most Popular Mortgage Loans

Fixed-Rate Mortgage Type: This is what many people stick with. The borrower has the privilege to choose from a 10-year, 20-year, 30-year, 40-year and even a 50-year fixed mortgage. All these are completely amortized.

FHA Loans: FHA loan types are insured by government through a mortgage insurance, which is directly put into the mortgage. Usually, first time home buyers are the main people to look into FHA loans, since their down payment is minimal.

VA Loans: VA Loans is a government loan type, which is offered to veterans who have served in the U.S Armed Forces, and to spouses of deceased veterans. The main benefits of this type of loan is that a down payment is not required.

Interest-Only Mortgage: Interest-only loans contain an option to make an interest-only payment. The option is available only for a certain period of time.

Hybrid Types of Mortgage Loans

Option ARM Mortgage: This type of mortgage is complex. The interest rate fluctuates periodically. Borrowers must be aware of the minimum payment option, because this can lead to negative amortization.

Piggyback Mortgage: This type of mortgage financing consists of two loans: a first mortgage and a second mortgage. The mortgages can be adjustable-rate mortgages or fixed-rate or a combination of the two. Borrowers take out two loans when the down payment is less than 20% to avoid paying private mortgage insurance.

Adjustable Rate Mortgage: The interest always changes, never stays the same. It can increase, decrease monthly, semi-annually, or even annually.

Mortgage Buydowns: Borrowers who wish to get a loan at a lower interest rate, may pay a certain sum of money to bring down the interest rate. This is why it is known as buying down. Buyers, sellers and lenders can buydown the interest rate for the borrower.

Specialty Mortgage Loans

Streamlined-K Mortgage: Similar to the 203K loan program, FHA has another program that provides money to renovate a home, and the extra amount is added to the loan. The dollar limits for repair work are lower on a Streamlined-K loan, but it requires less paperwork and is easier to obtain than a 203K.

Swing / Bridge Loan: These types of mortgages are offered when a buyer puts a home on the market, but has not been sold yet, and the seller wants to buy equity to buy another home. The sellers existing home is used as a security.

Equity Mortgage: This type of mortgage is used to receive cash. This type of loan can be adjustable, fixed or even a line of credit where the borrower may take cash out.

Reverse Mortgage: This type of mortgage is available to anyone over the age of 62, who has enough equity. Instead of making monthly payments to the lender, the lender makes monthly payments to the borrower for as long as the borrower resides in the home. The interest rate can be fixed or adjustable.

There you have it! These are the mortgage types available. You may not qualify for some of them, but you have a great selection here to choose from. Make sure you speak to a professional mortgage broker, who would help you choose the best solution.

5 Comments »

1. 

   I am thinking of getting a fixed rate mortgage loan.

   Comment by Ryan — December 23, 2008 @ 3:04 pm

2. 

   my relative was lucky enough to get the VA Loan. He was a veteran who served in the armed services.

   Comment by Maisier — December 24, 2008 @ 5:08 pm

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