There are three different types of mortgages. They are fixed rate mortgages, adjustable rate mortgages and balloon mortgages.

The most common mortgage is the "fixed rate mortgage".

Fixed Rate Mortgages
This is the most popular type of mortgage and there are many good reasons as to why. A fixed term (for example 15 or 30 years) as well as a fixed interest rate exists from the start of the mortgage. The monthly amount for the payment of the principal and interest will not change during the term of the mortgage. This gives the homebuyer a lot of stability when managing his or her finances.

The majority of the initial payments go towards paying off the interest on incurred on the loan. After the interest is paid off, the remaining payments begin to pay off the principal. If you would like to explore a fixed rate mortgage, please click here.

Adjustable Rate Mortgages (ARM)
The interest rate on your mortgage will be adjusted up or down according to current interest rate levels. The monthly amount for your principal and interest payment will go up or down with these rate changes.

Mortgage types can be adjusted through the years. For example, the first 15 years of a mortgage duration could be fixed, and the remaining years could be adjusted. This is another popular choice because interest rates could be significantly different in years down the road (which is attractive during high-interest periods).

There is a wide variety of ARM's available, most commonly the adjustment period is annually or every two years.

Balloon Mortgages
A "balloon" mortgage is similar to a fixed rate loan in that payments are made in equal installments over the duration of the loan. They differ in that the loan is not fully amortized over the term. Instead, a principal balance remains after the initial term, which can be paid off in full or by re-financing at the end of the initial term.

Which Mortgage is Right for Me?
Choosing a mortgage is a big and important, personal decision. The mortgage that is right for you is not necessarily right for someone else. Keep in mind the following:

• How long do I plan to keep my home?
• What are my current finances, debts and what is my projected income for the years ahead?

Since a mortgage is such a major and important decision based on your personal situation, we highly recommend that you speak to a mortgage professional. For online inquiries try this link.