What are the different types of mortgages available?

There are several different types of mortgages available in North Carolina. The two most common are fixed-rate mortgages and adjustable-rate mortgages. Fixed-rate mortgages provide the same rate of interest throughout the life of the loan. Once the loan is closed, the interest rate does not change and the monthly payment for principal and interest remains the same. This type of loan allows borrowers to budget and plan their monthly payments, since they won’t experience any surprises due to rate increases. Adjustable-rate mortgages (ARMs) generally begin with a lower interest rate than a fixed-rate mortgage, but the interest rate changes periodically in response to changes in the market. The interest rate can go up or down depending on current market conditions. An ARM is attractive to borrowers who may need to move or pay off the loan in a shorter period of time. Another type of mortgage is an FHA loan. These loans are insured by the Federal Housing Administration and are available to those who cannot qualify for conventional mortgages due to their credit score or history. FHA loans typically require a lower down payment than other types of loans and can be used to purchase a home, refinance an existing mortgage, or make home improvements. Finally, VA loans are available to veterans, active duty military personnel, and surviving spouses of deceased veterans. These loans are provided by the Department of Veterans Affairs and are guaranteed by the federal government, so they are easier to qualify for even if the borrower has less than perfect credit or a low down payment. By exploring the different types of mortgages available in North Carolina, borrowers can find the option that best suits their needs.

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