Mortgage Loan Terms To Remember

Mortgage has been derived from a French word 'mort' meaning death that means 'agreement until death'. A mortgage loan refers to a loan secured by residential property and often used for a purpose to lock a real estate. It refers to a pledge to repay the loan borrowed from a financial institution. Compared to other types of loans, these types of loans are available at a lower price because of the value of property risk for the lender.

In the present market there are a variety of mortgage loans available. Choosing the best amongst so many is difficult, but a comparative study of a few most common and popular types loan are the following:

Fixed Mortgage Loan - this is the most widespread and popular type of mortgage loan where the interest rate remains fixed throughout the tenure of the loan.

Variable Rate Mortgage - these types of mortgage loan will have a fluctuation throughout the life of loan.

Adjustable Rate Mortgage - this loan has a unstable rate of interest where interest payments depends upon the high or low rates of interest prevailing in the market, such as when rates are low borrowers pay less whereas when rates are high they pay more.

Convertible Loans - these types of loans are easily convertible meaning when the interest rate is too high one can easily convert the loan into a fixed mortgage loan.

Balloon Loan - Balloon loan is a fixed rate convertible loan where the borrower has to pay some amount monthly for a short term usually 5-7 years and after that the repayment will be a one time payment.