Which Mortgage? Part 2

Adjustable Rate Mortgage:

Almost self explanatory, the interest rate on your monthly repayment will adjust according to the bank rate. So your monthly repayment will go up and down as the bank or mortgage lender decides according to the fluctuations in the interest rate. Sometimes this can save you more money than if you were opting for a long term fixed rate. However, it is a gamble and the market need monitoring so that you can switch to a fixed rate in a hurry if needs be. This switching can also be problematic, as the optional fixed rate when you want to switch, will often be higher than a regular mortgage rate would be offering. So check the small print. (Always!) Experts actually stress that you check the small print carefully on this one and that if you take an adjustable rate mortgage out try it for a three year period only. Some adjustable rate mortgage contracts do have a clause written in that allow you to change fairly easily.

VA Mortgages:

VA stands for Veterans' Affairs and amazingly, twenty nine million American veterans and service employees can qualify for a VA (veteran) loan. These VA loans will usually be at an extremely competitive rate, are easier to qualify for, often need no down payment and do not require to be insured. VA loans also have other advantages and service personnel would be well advised to look into this opportunity.

Interest Only Mortgage:

A quick way to describe this is to say that it is like having a line of credit. You just keep paying the interest but the principal stays the same. This means reduced payments - which can be a good option in times of financial stress. However, it also means that you have never paid off your house! The length of the term can be anything up to fifteen years. Once the loan comes to full term, you then have to pay back the total loan principal. If the realty market has increased significantly then this may offer no problem.

High End Mortgage:

This may not affect Mr. Jo Average. These have come into play in New York where a second mortgage may be needed to 'top up' the finances. This is because the first mortgage has a government ceiling on it that may be lower than the house cost. Most people that require this type of mortgage will use specialist help as it is inevitably a higher interest rate and also requires a top notch credit rating.

FHA Mortgages:

FHA stands for the Federal Housing Administration. This is a scheme to insure a mortgage on a property. Its history goes back to the 1930s where it was used to help higher risk families obtain financing. Because they were paying insurance on their mortgage, the lender was not taking the risk, thus making it easier for people to buy their own home.

In Part 1: Fixed Rate Mortgages, Reverse Mortgages, HUD Mortgages, Assumable Mortgages.