Fixed Loans A fixed loan is a loan that is amortized equally for a fixed period of time. The mortgage payment is the same throughout the life of the loan. Fixed loan  mortgage can be for 30 years; 25 years; 20 years, 15 years or 10 years. It is good for someone on a fixed income, or someone who does not want to take a chance of the rate or payment going up. During the time when interest rates are low, it is not bad to have a fixed rate mortgage. The borrower has the option of the number of years the loan should be fixed, subject to qualifying for the payment. The shorter the length of the mortgage, the higher the monthly payment. The advantage is that the shorter the length of the mortgage, the faster the borrower will accumulate equity (a fast road to creating wealth) thus, the lesser the total interest on the loan that the borrower will pay in the life of the loan.

Adjustable Rate Mortgage Adjustable Mortgage: This is sometimes called ARM mortgage. In this type of mortgage, the interest rate is only fixed for a specified period and thereafter, the interest rate will begin to go up by a specified rate. The common ARM periods are, 1 year ARM, 2 year ARM, 3 year ARM, 5 year ARM, 7 year ARM and 10 year ARM.  On a five year ARM for example, the rate will stay the same for five years, after that the rate will start going up or down every year to a maximum rate specified in the Note. Adjustable Loan could be LIBOR ARM or Teasury ARM. One advantage of the ARM mortgage is that the payment is lower than fixed rate at the early years because the interest rate is below fixed rate most of the time. It could work to the advantage of the borrower, if the borrower is able to pay the extra money saved into the loan principal. One disadvantage is that when the rates start to go up, at the end of the fixed ARM rate period, the ARM rate will go up, thus, increasing the monthly payment. If borrower is on a fixed budget, the borrower may run the risk of losing the property. The ARM Loan will work well for a borrower that intends to live on the property for short period of time, or expecting an increase in income as the year goes by.

Interest Only Loan

Interest only loans are loans that you repay only the interest, the principal does not have to be re-paid during the period Interest Only Mortgage is in effect. This allows you to make lower payments each month, however, the principal is not being reduced.  In some cases, the principal may be increasing, like in Interest Option Loans. American Mortgage Home, Inc. makes these and various other loan products. It is important that the borrower make sure that a particular loan program is good in the borrower's case.  When in doubt, we recommend that the borrower seek professional advice.