The modern mortgage market offers a variety of mortgage loans catering to the needs of home buyers. The titles and details of these plans can easily become confusing, especially as new types are continuously introduced. You can make sense of these loan types, however, if you understand the basic principles that govern all mortgage loans. Again, you can look to your real estate professional for assistance.
As you learn more about the types of financing available, you will notice that some loans appear to have more favorable terms. This may indicate that those loans are, indeed, bargains (and it does pay to shop around), but usually it means that those loans could have some feature that is less appealing to borrowers. For example, shorter-term loans often have slightly lower interest rates compared to longer-term loans. However, the monthly payment for the same amount of principal may be higher because of the shorter term. Variable rate loans usually have much lower interest rates to compensate for the risk the borrower accepts that interest rates will rise in the future.
* Conforming FNMA Loan Amount. Rates last updated Mar 27, 2018