A home loan is sometimes referred to as a mortgage. A home loan is used to purchase a home or property. It is paid in installments over a set period of time. There are different types of home loans. The most common type of home loan is a fixed rate home loan. These are especially attractive to first time home buyers. Fixed rate home loans are stable, with a monthly payment that remains the same over the term of the loan, which is usually 15 years or 30 years. Fixed rate home loans are low risk, protected against inflation and easier to budget. Adjustable rate loans vary from fixed rate loans, in that the interest is constantly adjusting and changing. The home loan’s interest rate “adjusts” after an initial period which can last from a few months to a few years. The interest rate slowly decreases in value the longer the loan are repaid. A third type of home loan is the balloon home loan. In a balloon home loan, the monthly payments are based on a 30 year amortization schedule, but the entire home loan balance is due at the end of the loan’s term, which is either five [...]
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