Tuesday, January 25, 2011

There are many type of mortgage as given below-:
A fixed rate mortgage is that one where the interest rate remains constant for a set period; typically for 2, 3, 4, 5 or 10 years. Longer term fixed rates (over 5 years) whilst available, tend to be more expensive and/or have more onerous early repayment charges and are therefore less popular than shorter term fixed rates.
A capped rate  where similar to a fixed rate, the interest rate cannot rise above the cap but can vary beneath the cap. Sometimes there is a collar associated with this type of rate which imposes a minimum rate. Capped rate are often offered over periods similar to fixed rates, e.g. 2, 3, 4 or 5 years.
A discount rate; where there is set margin reduction in the standard variable rate (e.g. a 2% discount) for a set period; typically 1 to 5 years. Sometimes the discount is expressed as a margin over the base rate  and sometimes the rate is stepped.
A cashback mortgage; where a lump sum is provided (typically) as a percentage of the advance e.g. 5% of the loan.
ARMs that allow negative amortization will typically have payment adjustments that occur less frequently than the interest rate adjustment. For example, the interest rate may be adjusted every month, but the payment amount only once every 12 months.Cash flow ARM mortgages are synonymous  with option ARM or payment option. ARM mortgages, however it should be noted that not all loans with cash flow options are adjustable. In fact, fixed rate cash flow option loans retain the same cash flow options as cash flow ARMs and option ARMs, but remain fixed for up to 30 years.
The rate adjustments, which are based on changes in one of the publicly reported indexes that reflect market rates, occur at preset times, usually once a year but sometimes less often.In mortgage adjustable rate, the amount of interest rate may change over the time.
A cash-out refinance is like a regular refinance except that the total amount of the loan is greater than your current mortgage balance, and you walk away from the closing table with the difference in the form of a check made out to you, which could be used to pay off high-interest credit card debt, for example, or for anything you like.