Mortgage Loan

Adjustable-rate mortgages offer a low initial interest rate that increases after three or five years. This type of mortgage is good for consumers who do not expect to stay in one place for an extended length of time. It allows you to have a lower house payment for three to five years before the rise in interest rates. This type of mortgage loan is also good for consumers that anticipate having a higher paying job in the next couple of years. It allows them to buy more house than they would typically have been able to afford with the projection that their income will increase in the foreseeable future.

Interest-only mortgages are an option where the borrower is only paying the interest due on their loan and nothing on the principal. This type of loan may get the consumer into more house than they can afford, but is dangerous for the future when the initial period is over and the adjustable rate mortgage kicks in since interest rates are so unpredictable. The initial period may end at a time when interest rates are high or at a time when real estate takes a dive and you have no equity in your property.