Mortgage Types Explained

For many Americans, part of the American dream is owning

their own home. But for the majority of people not named

"Gates," purchasing a home outright with cash is well beyond

their financial scope. So, they need to get a mortgage to

purchase their home. But getting a mortgage can be a

complex process, especially for first-time home buyers.


So what is a mortgage? Basically, it is an agreement

between you and a lending institution that says you will

repay your loan at a certain interest rate over a certain

number of years. The mortgage will be secured against loss

with your new home, so if you default, the lending

institution will take ownderhip of the home.


You may be familiar with personal loans or the interest

charged on your credit cards. The good news is that home

mortgages generally offer a lower interest rate than credit

cards or personal loans because of the longer period of time

over which you will pay the off the loan and the interest.

Your loan payments will usually be monthly, and the

repayment terms could be anywhere from 10 to 30 years.


There are two major types of home loans in America now, with

a third type becoming more popular in recent years. The

first type of loan is the fixed home loan which allows you

to borrow the money at a specified or fixed rate of interest

for a specific numbers of years. Many borrowers sign up for

this loan because in doing so they avoid the risk of having

to incur extra expenses if home loan interest rates should



The second type of loan is the variable home loan which has

a variable or changing rate of interest. Should the Reserve

Bank determine that interest rates will move up or down in

a particular quarter, then your lender has the freedom to

also do so accordingly. If the rates are heading downwards

it is ideal for borrowers. But should they begin to trend

upwards this can spell danger for many people who live on a

tight budget and already struggle to make their monthly



Lately, there has been a new type of mortgage that has been

gaining popularity. Called a "low doc" or bad credit loan,

these types of mortgages usually come with higher fees and

higher interest rates to offset the additional risk to the

lender who is working with those with bad credit. But for

many, these low doc mortgages are the only way people with

poor credit or low incomes can get into the home of their



But, no matter what your credit history, there is a home

mortgage out there that will fit your needs. You just need

to do your research, practice a little patience, and you

will soon be pulling the "For Sale" sign out of the lawn

of your new home!


Apu Hypallathek is the owner and operator of Use Mortgage, Inc., a

leading Internet directory for mortgage information. For more

mortgage information and resources, please stop by:





Visit our friends at

Mega Shopping Mall


Romantic at Heart Personals