So you’ve decided on a home and now you need the money. There are several different types of mortgages and you would need to determine which is best for you. A couple of questions to ask yourself before going out for a mortgage would be:

1. What is my current financial situation?

2. How much can I afford to pay monthly for the mortgage?

3. How much am I paying for housing now?

4. Can I negotiate a better price for the property?

5. Will I still be able to make monthly payments of that size in the future?

6. How long do I want to pay this mortgage off for?

7. What is the current interest rate for mortgages published by the FED?

8. What kind of interest rates are the lenders offering?

There are several different types of mortgages and they all fall into one of these three:

Fixed Rate Mortgage
The interest rate is constant throughout the course of the loan period. The loan period is really up to you; there are several options that span over the course of ten to thirty years. A fixed rate mortgage provides payment stability and it suited to those who prefer payment stability.

Adjustable Rate Mortgage
The interest rate on this type of mortgage is constant for the initial period of the loan (a couple of years). After the initial loan period, the interest rate is adjusted every year based on current market conditions. The adjustable rate mortgage provides initial payment stability. Some people prefer this because they may need stability in the beginning, but they will be financially flexible in the future. The adjusted interest rate could work to your advantage, if the interest rate falls dramatically, you might be able to pay less than the original fixed interest rate.

Balloon Mortgage
The initial payment period has a fixed interest rate. After the initial period, the lender requires a lump sum payment of the remaining balance of the loan. You can pay this lump sum or you can refinance and pay the original lender off. Typically, people who choose the balloon mortgage expect to have a lump sum available at the end of the fixed rate period, or they are speculating that the interest rate will drop and hope for the best refinancing terms. Another option is to sell the home after the initial period.