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Common Types of Mortgages

It used to be that there were only three types of mortgages available to homebuyers. These buyers could get a fixed-rate mortgage, a FHA loan, or a VA loan. Now, there are a variety of mortgage types and even hybrids. The most common loan types are still fixed-rate mortgages, FHA loans, VA loans, and interest-only mortgages.

Fixed-rate mortgages are the oldest form of the mortgage. It is the granddaddy of all home borrowing options. They are now available in 10, 15, 20, 30, 40, and even 50 years fixed-rate mortgages which are all completely amortized. The benefit of a fixed-rate mortgage is that the interest rate does not fluctuate and so the monthly payment remains the same.

FHA loans are mortgage loan types that are insured by the government. These are insured via mortgage insurance that is funded and built into the loan. First-time home buyers are ideal candidates for FHA loans because there is a low down payment requirement and FICO scores don’t matter.

VA loans are available only to veterans of the U.S. Armed Services and, in some cases, to the spouses of deceased veterans. The requirements change from year to year and also on the number of years of service. Another contributing factor was whether discharge was honorable or dishonorable. The biggest benefit is that the borrower does not need a down payment to secure the loan. The loan is guaranteed by the Veterans Administration but is funded by a conventional lender.

Interest-only mortgages are misleading. These mortgages do not require that an individual pay only the interest. They are loans that have an option for the borrower to make only an interest payment. This option is only available for a short period of time.

Contact a Boston Bankruptcy Lawyer

If your adjustable rate mortgage has put you behind on payments and you are facing a dire financial situation, contact the Boston bankruptcy lawyers of Joshua Spirn & Associates at 1-800-975-5346 today.