Choose a Loan
Though there are many different kinds of loans available today, these three are the most commonly used:

. Fixed loan.

This long-term option requires monthly payments that will remain the same throughout the duration of the loan, which may vary from ten to forty years. Though it's the most affordable short-term solution, it may cost more than shorter-term mortgages over the life of the loan.

. Adjustable rate mortgage (ARM).

ARM rates are determined by factors such as index, readjustment intervals, and capitalization rate. The initial interest rate can be as much as 2 to 3 percent lower than a comparable fixed rate mortgage, which can make homeownership more affordable. However you should first examine variant factors and downside risks before seriously considering this option.

. Interest Only - Fixed Loan.

This loan option requires monthly payments of only interest for fixed period of time. The interest rate will remain the same throughout the duration of the loan, but the payment will increase once the interest only period expires. The interest only period may vary from five to ten years. Though this is an affordable short-term solution, it may cost more than fixed loan mortgages over the life of the loan.

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