Amortization Schedule For Personal Loan

Posted onDecember 14, 2011 - 7:40 pm by Admin | 0 Comments

Confused by all the different mortgages available for home buyers? Although interest rates change periodically based on the economy, some constants remain. When shopping for the best way to borrow money for that dream house, be armed with information and spend time deciding which is the best option before signing on the dotted line.

Fixed Rate Mortgages

The fixed rate mortgage is exactly what it sounds like – a mortgage with an interest rate that doesn’t change over the life of the mortgage. It won’t go up if interest rates soar, but on the flip side, it won’t go down if the rates drop, either.

The fixed rate generally starts out at a higher rate than the current adjustable rate because the risk of having an escalating loan rate is lower. Most experts agree that the fixed rate mortgage is a safe option for people who have low tolerance for risk or plan to stay in their home for a long time.

Adjustable Rate Mortgages (ARMs)

The adjustable rate mortgage is one that can go up or down over the life of the loan, based on the current rates when the adjustment is made. This type of loan is good for people who expect their incomes to increase over the next few years.

Although the adjustable rate loans have a higher risk than fixed rates, most ARMs have the protection of caps on how much the payments can increase or decrease, so both the lender and borrower are protected. People who don’t plan to stay in their house long may also benefit from the adjustable rate mortgage.

Balloon Mortgages

The balloon mortgage is generally based on a set amortization schedule – typically thirty years – but the term of the loan is only for five or seven years. At that point, the balance of the loan is called due. The balloon mortgage often offers much lower interest rates than fixed or adjustable rate mortgages.


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