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Types of Home Loans

Updated - December 09, 2020

If you are a first time home buyer, you have a lot of things to learn. Getting on with it without doing some research first can have some serious consequences. If there is a subject that you have to know about when it comes to buying a house, that would have to be home loans or mortgage. You have to study everything that you can about mortgage because that is the only way that you can afford your new house, unless you can pay for it in cash.

Types of Home Loans
One of the more basic things that you need to learn about home loans is the different types that are available. By knowing more about the different kinds of loans, you would which one would be more suited to your needs. Here are some of the more common kinds of home loans that you can get:

Fixed Rate Home Loans
As the name suggests the main characteristic of this kind of mortgage is that its interest rate is fixed throughout the term of the loan. It is most commonly used with a 30 year term though much shorter periods are also offered. The main advantage of this type of mortgage is that you know how much payment that you will be making through the entire term. Nothing will change that. For some people that security is synonymous to peace of mind. The moment that the market becomes favourable, you can just opt to refinance then.

Adjustable Rate Home Loans
The opposite of the fixed-rate mortgage, here the interest fluctuates with the market. There are limits that are set to the fluctuations of the rate. There is a minimum and a maximum decrease and increase and the rate changes are fixed on certain intervals. Here the trend in the market would affect what you have to pay.

The biggest advantage with an adjustable rate mortgage is that the rates are a lot lower initially. The problem is that the rates are more likely to increase and not decrease.

Flexible Payment Option
This is a variation of the adjustable rate mortgage. As the borrower you get to choose a payment method that would suit you best. There is a limit on the number of times that the payment mode can be changed. The problem is that there will be a point where you will have to pay substantially more and that can increase the total of what you owe.

Interest Only Home Loans
This is ideal for those who cannot afford a house just yet under the more common loan types. This means that the borrower would only have to pay for the interest. But there’s a limit to that. After a certain period, you would have to make payments towards the principal amount as well. Keep in mind that if you cannot afford a house now, then it might be more prudent to wait until you have better finances.

These are the different types of home loans that you can get today. There are actually some other types of loans but these are the major ones that are currently available.

How you can get the quick loans with poor credit

The worst score of credit limits what options of loan are obtainable to you. If you meet the criteria for the loan then the rate of the interest will be higher than for somebody with better credit history. If you have maxed out the card of credit and do not have the protection of overdraft on the account of checking then you can yet get the quick loans with poor credit. The good thing about the quick loan is that this is not having an effect on the credit report. And the bad thing about the quick loan is that this is very expensive. You should get the quick loan on the best terms for you.