Should you get  fixed or adjustable rate home mortgage loans

What's the Best kind of home loan?
The kind that meets YOUR needs. Depending on what your plans are can help determine what kind of loan is best for you.  For some Fixed Rate Mortgages are the best, others an Adjustable Rate Mortgage works better. These are brief explanations, be sure you understand all the terms of any type of loan you decide to get. The lender you choose will provide you a detailed explanation of their loan package.

Fixed Rate Mortgages
Rates and your credit history determine what your payment will be each month. In this loan the rate remains the same for the life of the loan. The life, or TERM, can be 15, 20, or 30 years. Usually, the shorter the term, the lower the interest rate.  The loan is amortized, meaning both the interest and the principle are paid off at the end of the loan. Even with bad credit, you can still shop around to get the best deal. If you are going to stay in your home for at least 7 years, this is the loan mortgage finance program for you.

Adjustable Rate Mortgages(ARM)
Just what the name says. The rate adjusts, it's tied to prime rates, which can change, or even treasury bills, which change on occasion as well. Rates go up, so do your payments. Lenders can only adjust the rate at given times. For example, only once a year. Another good reason to shop around and apply for a loan mortgage finance with several different lenders. Great Deal if you are only going to be in your home a short time. These loans rates usually start out low, and can get higher the longer you have the loan. Use this to help rebuild your credit. Your interest rate and payment is low for the first few years (depending on the loan) then goes up. Clean up your credit and then refinance to get an even better rate and payment.

Combination Fixed and Adjustable
Find a combination Fixed Rate and Adjustable rate if you are going to live in your home for a few years. The fixed rate is good for a certain number of years, keeping your rate low, and then after a number of years the loan adjusts. Look around and apply to several lenders to find the deal that fits your needs.

Two Step
Much Like the Combination Fixed and Adjustable loan. Low payments early, and after around 5-7 years your rate goes up.

Convertible ARMS
You can get a fixed rate during the first few years of this loan, or convert this loan early on. Unless you are certain about moving before the low rate is up this isn't the loan for you. It costs you money when you convert.

Balloon
You only pay interest until the end of its term. Then you have to pay off the balance all at once. Or Refinance. Rates are usually pretty low on these deals, use these types of loans when you are going to sell your house before the end of the loan. You get real low monthly payments, because you only pay interest, but you don't put any money towards equity in the house. These can help you save on your monthly payments. You can apply for a loan for free, and find out exactly what your monthly payment would be.

Graduated Payment Mortgages (GPM)
Use this loan to qualify for a higher loan amount if you plan to sell your home in a few years, or plan to refinance later on. You pay less than the interest rate early, then your monthly payment gradually goes up at set times.

Bridge Loans
Temporary loan while you sell your house. Very short term with a low interest rates.

Most of the loans offered by lenders, even with different names, are just variations of these basic loan types. When you apply for a loan mortgage finance, carefully look over the offer to be sure that it fits your needs. If you accept an offer just based on the monthly payment, you could be in for an unpleasant surprise a few years down the road.

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