For most people, buying a house is the biggest transaction of their lives. You’ll be paying on the mortgage loan for the next few decades, so it makes sense that you would take care in choosing the right loan.

Not all mortgages are created equally. There are many different types of mortgages. The basic distinction is made between fixed-rate and adjustable-rate mortgages, which have interest rates that either stay the same or change based on market interest rates. You’ll have to choose the one that’s best for you.

Adjustable-rate mortgages aren’t all bad. ARMs got a bad rep when the subprime mortgage industry suffered a meltdown beginning in 2006. Many homeowners saw their ARMs resetting at higher interest rates and the monthly payments subsequently became unaffordable. However, adjustable rate mortgages don’t always reset at such high interest rates and can be beneficial for homebuyers who plan to move within a few years. Continue reading →

Mortgage loans are a type of secured loan which uses a person’s home as collateral. Considering that the price of a moderate house can be about $350,000 it’s very unlikely that a family will purchase their home in one full payment. For most people this would mean saving money for years and years and paying rent while they finally have enough to make the purchase. How old would they be by that time? Over 50 for the average American.Clearly this is not an option people will choose, thus the mortgage loans came to existence.

What’s good about mortgage loans? They let you buy a home when you can’t afford it and also save you the money you would pay for rent if renting. Continue reading →