The Different Types of Mortgage

If you have not been in the market for a mortgage, you could be surprised by the variety available. The amount of data and information available could overwhelm some. Still, to fully understand any loan, you need to look at who is lending the money and who might be backing the loan. For example, the government underwrites a lot of mortgages, and some of the more common forms of assistance goes to military veterans and first time home buyers.

Many other mortgages are based entirely on a different set of circumstances. It is easier for some people to get a mortgage once you already have one. After all, you can put your current home up as collateral. Some types of mortgages are called combo or piggyback loans. This involves taking out two mortgages at a time and one facilitates the other. The government will not underwrite these sorts of loans. It is also hard to find two separate financial institutions to take part in a piggyback. Typically, it involves only one lender who is willing to issue two separate loans. In many cases, the lender will be a bank.

There are other types of mortgages, and not all of them are equitable. Long duration 40 year mortgage loans are typically offered to people with bad credit, and the borrower ends up paying a lot of money in interest. Plus, there are variable rate loans as well. These are “sub prime” and the rate of interest changes, sometimes without warning. A borrower can make all of their payments on time and still see their monthly payments skyrocket. These loans landed a lot of homeowners in foreclosure over the years.

When looking for a mortgage, you need to exercise care and a attention to detail. Not every loan product will be right for you, and you should never take anything that is offered to you. You should always shop around with the lending terms and play one borrower off from another. This way, you will easily find out what is a great deal and what is less than attractive.