There are many different types of home loans available for current and potential home owners. In fact the amount of loan programs that have become available can seem a little overwhelming to some borrowers. While there are exotic mortgage plans on the market most borrowers will benefit from the old proven mortgage programs.Types Of Home Loans For the Average BorrowerFixed Rate Loan
- This is the loan your parents probably bought their home with and is by far the most popular. The fixed rate loan offers a set interest rate and payment over the life of the loan. This is by far the safest and most secure loan for the average borrower.Adjustable Mortgage
- The adjustable mortgage offers a slightly lower rate then a fixed mortgage but does have some drawbacks associated with it. The main drawback is that after the initial fixed rate period the interest rate can go up or down depending on the current market conditions. They do however offer borrowers that know they will refinance or buy a new home a lower payment over a fixed rate. Interest Only Mortgage
- This type of home loan is set up so the borrowers only pay towards the loans interest and not the principal balance. They are available as both fixed rate and adjustable rate loans. They are normally structured so that the interest only period ranges from 5-15 years and then after that the loan flips to a standard principal and interest loan, the payment will increase as well. These are great for people the need a lower payment for short time and can afford a higher payment later.
FHA and VA Loans. These are great loans if you have little or no money saved for the down payment. If have served in the armed forces you may qualify for a VA loan. Alternatively, whether you have served in the armed forces or not you may qualify for an FHA loan.
These loans allow you to get into a home with easier restrictions than most loans.