Different Types of Mortgages:Fixed Rate Mortgage:In Fixed Rate Mortgage, the interest and the monthly installment is fixed and does not change till the mortgage comes to an end. Suppose the interest is fixed as 6% and the monthly installment is fixed as $500, the interest and the monthly payment remains the same throughout the whole period. Adjustable Rate Mortgage:In an Adjustable Rate Mortgage, the rate of interest and the monthly installment does not remain firm. Suppose the Mortgage period is for 10 years, the finance company would offer a fixed interest rate for a particular period (e.g. for the 1st three years). After a period of 3 years again the rate of interest will be fixed as per the current market interest rates. Some financing companies’ fixes the rates from time to time as per the market rate but it will not be increased for more than a particular percentage. Some financing company does not collect interest for a particular period, say for 6 months in the beginning of the repayment and from 6th month onwards they will fix the interest. Baloon Mortgage:In a balloon mortgage, the rate of interest and the monthly installment is fixed for a particular period of time, and after the completion of the period the remaining balance due has to be paid at one sitting. Second Mortgage:For the purpose of meeting some other expenses, you may need money. For this requirement you can avail second mortgage on a property which you have already mortgaged. The procedure in the case of the second mortgage is the same as first mortgage. The second mortgage will be given taking into account all you owe to the first lender and the value of the property. You have to prepare a mortgage agreement with the second money lender also. Mortgage Broker:You can approach a mortgage broker to mortgage your property. A mortgage broker knows the activities of different types of Finance company, and may provide you with necessary information as to the relevant finance company which suits your need. Mortgage Insurance:
Mortgage insurance is the insurance which will pay the mortgage money to the lender incase the borrower defaults to give his payment. The money paid to the lender is recovered from the borrower giving time to pay the amount, or by way of foreclosure of the property.
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