Different Types of Mortgage Loans Montgomery, AL
There are different types of mortgage loans in Montgomery AL. When you decide to buy a home, at that time, you have the need to know what type of mortgage loan is right for you.
Fixed Rate Mortgage Loan
The interest rate in this type of loan remains unchanged throughout the whole life of the loan. It means the tax payable on the loan remains constant. This gives some level of confidence to prospective homeowners, i.e., if interest rates in this type of loan go up, their loan will not be affected. But, there is also a drawback of this type of loan, i.e., if there is a fall of interest rates, they have no advantage of it.
Varying Rate Mortgage Loan
In this type of loan, for the first period or for the first year, interest rates are agreed. It keeps on changing for the remaining years in accordance to the reference rate which is agreed in the contract, adding a spread that varies based on the conditions which are set out in the terms of the agreement.
Joint Interest Mortgage Loan
The interest rate in this type of loan is kept fixed for two or more years combined. This is followed by another period in which it is variable and is adjusted in accordance to the prevailing conditions in the market.
Flat Fee Mortgage Loan
This type of loan is characterized by a flat rate. It closely appears like the fixed-rate mortgage loans Montgomery AL which considers the fact that the customer always pays the same rate regardless of changing the interest rates. The big difference is that if interest rates go up, instead of the borrower paying more fees, the period of repayment is extended and if there is a fall of interest rates, the period of repayment is shortened.
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