Master mortgage basics for smarter home buying decisions

Types of Mortgages

There are several types of mortgages available, each with distinct features and benefits. The two most common types are fixed-rate and adjustable-rate mortgages (ARMs). A fixed-rate mortgage offers a consistent interest rate for the life of the loan, providing stability and predictability in monthly payments. In contrast, an ARM typically starts with a lower interest rate that adjusts periodically based on market conditions, which can lead to lower initial payments but increased risk over time.

For those with specific needs, government-backed loans such as FHA, VA, and USDA loans offer unique advantages. FHA loans are designed for low-to-moderate-income borrowers and require a lower down payment, while VA loans provide favorable terms for veterans and active-duty military personnel. USDA loans target rural homebuyers with low to moderate incomes, offering zero-down-payment options.