Thursday

Learn the two main types of mortgages:

There are two main types of mortgages: Adjustable-rate mortgages and fixed-rate mortgages. It’s critical borrowers are aware of each option and choose the one that best suits their situation. The most important factor in selecting a loan type is the length of time the borrower plans to remain in the home.
(source: California Association of Realtors)

Adjustable-rate mortgages (ARMs) have fixed rates for a short period, usually three, five, or seven years, and then readjust. ARMs are considered riskier because the interest rate and payments can increase when the loan adjusts. Fixed-rate mortgages have an interest rate that stays constant throughout the period of the loan.
Both fixed- and adjustable-rate loans allow borrowers to select various repayment periods. The most common term is 30 years, but if a borrower can afford the higher monthly payments of 20- or 15-year terms loan, they will save money with the lower rate and quicker payoff period.