Compare Mortgages
Fixed-Rated Mortgage: A mortgage on which the interest rate is set for the term of the loan, regardless of future interest rate fluctuations. This makes payments precisely predictable, but it’s not always the cheapest alternative.
Adjustable Rate Mortgage (ARM): A mortgage in which the interest rate may vary and is adjusted periodically based on a pre-selected index. Sometimes known as a variable rate mortgage. These types of loans can be cheaper initially, but can be unpredictable.
Other Types of Mortgages
Balloon Mortgage: A balloon mortgage works like a fixed-rate mortgage, except for a much shorter term, with lower monthly payments, and a large “balloon payment” at the end of the loan’s term.
Blanket Mortgage: A mortgage which covers two or more pieces of real estate. The real estate is held as collateral on the mortgage, but the individual pieces of the real estate may be sold without retiring the entire mortgage.
Conventional loan: A mortgage not insured by the Federal Housing Administration (FHA) or guaranteed by the Veterans Administration (VA). This mortgage is not a sub-prime loan.
FHA Loan: An FHA loan is a mortgage insured by the Federal Housing Administration that can be issued by any federally qualified lender. The FHA established the mortgage program in 1934 to help lower income borrowers obtain a mortgage who would otherwise have trouble qualifying. Before then, it was common for potential homeowners to put down 50% of the value of the home as a down payment.
Subprime Lender/Loans: A lender that charges a finance rate that is higher than the “prime” or normal rate offered by conventional lenders. Typically, it’s a lender that approves loans for individuals who may have poor credit history or no credit history, or who have other characteristics that justify a higher rate. Keep in mind: because you’re approved for a sub-prime loan doesn’t mean that you cannot qualify for a conventional loan from another lender. Be sure to explore your options.
