Mortgage Loans

Twenty years ago the typical lender that offers only two mortgage products, fixed-rate loan with payments amortized over fifteen years or thirty or a one-year loan adjustable rate. Today, lenders offer a variety of credit products with a large number of options, making it difficult for consumers to fully understand their loan, the interest rate they are paying, and the interest rate paid on the future.

The reason for this wide range of financial products to meet the needs of consumers, most often to lower monthly payments, increase the size of the mortgage (which allows the purchase of a more expensive house) or reduce the payment required of the traditional twenty percent of little or no down payment.

The traditional mortgage is based on a fixed rate and is known as a fixed rate loan. These loans carry an interest rate for the entire term. In the housing sector, the usual amortization period is 15 or 30 years. While a 15-year loan will result in a higher monthly payment, this mortgage also reduces the front loading of interest charged by lenders, resulting in a substantial reduction in the principal balance due at 5 years (the owner of an average home, is found in a home 5-7 years).