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6 Different Types of Mortgages

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What are the 6 Different Types of Mortgages?

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What Kinds of Mortgages Are There?

There’s several different types of mortgages, here’s the most common:

Fixed Rate Mortgage

This is the most common type of mortgage, in which the interest rate remains the same throughout the loan term. This type of mortgage offers stability and predictability, as the monthly payment remains the same even if market interest rates change or there’s increased inflation.

Adjustable-Rate Mortgage (ARM)

An ARM has an interest rate that can change over time, usually in response to changes in market interest rates. The interest rate is typically lower than a fixed-rate mortgage at the beginning of the loan term, but it can increase or decrease over time.

FHA Loan

A Federal Housing Administration (FHA) loan is a mortgage insured by the FHA. These loans are designed for borrowers with lower credit scores and are often used by first-time home buyers. FHA loans have more flexible credit and down payment requirements than conventional loans.

VA Loan

A VA loan is a mortgage guaranteed by the Department of Veterans Affairs (VA). These loans are available to active duty military members, veterans, and certain surviving spouses. VA loans have more flexible credit and down payment requirements than conventional loans and do not require private mortgage insurance.

Jumbo Loan

A jumbo loan is a mortgage that exceeds the maximum loan limits set by the Federal Housing Finance Agency (FHFA). These loans are typically more expensive than conventional loans because they are considered to be higher risk.

Reverse Mortgage

A reverse mortgage is a type of loan available to homeowners 62 and older that allows them to borrow against the equity in their home. Reverse mortgages do not require monthly payments, but the loan balance increases over time and must be repaid when the borrower sells the home or passes away.

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