What are the different types of mortgage loans?

Mortgage loans come in many different forms and types in California. The most common type is a fixed-rate mortgage. This is a loan where the interest rate remains the same throughout the length of the loan. In California, most fixed-rate mortgages are either 30-year or 15-year loans. With a 15-year loan, the borrower pays off the loan in half the time but the monthly payments are larger. Another type of mortgage loan is an adjustable-rate mortgage (ARM). This type of loan has an interest rate that can change throughout the loan term, based on an index or interest rate. California law requires lenders to disclose the risks of ARMs and the potential for higher payments associated with them. A third type of mortgage loan is a balloon loan. This is a short-term loan that typically has lower monthly payments but a large balloon payment due at the end of the loan term. These loans are risky, since the borrower has to come up with a large sum of money at the end of the loan term or refinance the loan. Finally, the last type of mortgage loan is a Government-insured loan. These loans are backed by the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). The major benefit of these loans is that they require little or no down payment, so they’re easier to qualify for. California lenders also offer special programs to help first-time buyers with these loans.

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What are the different types of mortgage loans?

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