What are the different types of mortgages?

In California, there are many different types of mortgages available to buyers of residential real estate. Common types of mortgages include fixed-rate mortgages, adjustable-rate mortgages, interest-only mortgages, FHA mortgages, VA mortgages, and jumbo mortgages. Fixed-rate mortgages are the most popular type of loan as they have a fixed interest rate for the entire loan term. This ensures that monthly payments stay the same amount, no matter how the market changes. Adjustable-rate mortgages (ARM) have a fluctuating interest rate that changes with the market. This type of mortgage is riskier than a fixed-rate mortgage because payments can become more expensive if interest rates increase. Interest-only mortgages are a type of ARM that require only the interest payment for a set period of time. This allows borrowers to reduce their monthly payments for a certain number of years, but after the interest-only period ends, the monthly payments increase as the principal balance must be paid as well. FHA mortgages are a type of government-backed mortgage insured by the Federal Housing Administration. This type of loan is more accessible to homebuyers with lower credit scores or who can’t afford a large down payment. VA mortgages are also a type of government-backed loan, but are available to only veterans and their family members. This loan requires no down payment and allows the borrower to get a loan with more favorable terms. Jumbo mortgages are those that go beyond the maximum amount allowed by standard lending rules. These mortgages often have higher interest rates than regular mortgages and often require a larger down payment.

Related FAQs

What is a right of first refusal?
What documents should I keep when buying a home?
What is a lease purchase agreement?
What is a short sale?
What is a landlord’s lien?
How can I find a lawyer who specializes in residential real estate law?
What constitutes a valid real estate contract?
How do I protect myself if I discover a defect in a home I am buying?
What is a Mechanic's Lien?
What is the difference between a realtor and a real estate agent?

What are the different types of mortgages?

Related FAQs

Related Blog Posts