Types of Mortgage


1. Fixed Rate Mortgages

There are several types of mortgages, but the most common are fixed-rate mortgages. These loans feature fixed rates and monthly payments, generally for 15-year and 30-year periods.

Fixed-rate mortgages are stable and offer long-term savings, because :

* The interest rate never changes,
* The monthly principal and interest payment never changes either.

They're popular because :

* Consumers balk at the thought of their house payment rising and falling with interest rates.
* Whenever rates are low, fixed-rate mortgages are very affordable.

If you plan to own your home for at least 5 years, a fixed-rate mortgage can help protect you from inflation. Because your mortgage principal and interest payment remains the same it is easier to budget.

Fixed-rate loan borrowers face one major choice: 15 year or 30? For some, a 30-year loan makes more sense. For others, a 15-year one does. Here are some pros and cons of each.

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