Mortgage Options Available to the Home Buyer
By  Naomi Bryne

As consumers spend more money and rely more on credit, mortgages have evolved to compensate the changes in consumer trends. In fact, mortgages have expanded to allow homebuyers with no or poor credit purchase homes. Mortgages are now available in a dozen different forms, with some mortgages spreading payments out beyond the traditional 30-year rate and push as far as 50 years, making owning a home affordable for those who would have never dreamed of the possibility before. Below are the three most common types of mortgages:

Fixed-Rate Mortgages

The most common, and perhaps popular, of all mortgages is the fixed-rate mortgage. These mortgages traditionally offer a 30-year plan, but are now available in 10-, 15-, 40-, and even 50-year payment structures. A fix-rated mortgage is the most common, because it offers buyers a firm, non-changing interest rate, and the payments stay the same for the duration of the loan. You know exactly what you\'ll be paying every month.

Interest-Only Mortgages

Interest-only mortgages may sound enticing, but don\'t let the name fool you. You do pay more than just interest with these types of mortgage, but an interest-only mortgage allows you to defer your principle payments by paying just the interest for a certain period of time, usually five or ten years. After that period, the mortgage is amortized for the remainder of the mortgage, causing the monthly payments to increase, sometimes drastically.

Interest-only mortgages do have their place; they are a good solution for homebuyers who know they are going to be making money later in their career, or for those who plan to make principle payments on top of their mortgage payment. The downfall is that most interest-only mortgages carry a higher interest rate. Problems can arise, and may have largely contributed to the current housing crisis, when homebuyers take on interest-only mortgages, and can afford the interest-only payments in the beginning of the loan, but don\'t plan for the higher monthly payments that come at the end of the interest payments.

Federal Housing Assistance Loan Mortgage

FHA loan mortgages are special mortgages that are insured by the Federal Housing Administration. FHA typically affords these mortgages to homebuyers who can\'t afford a down payment, allowing lower or sometimes even no down payment for the purchase of a home. First time homeowners are typically the individuals that utilize these mortgages, because good credit is not a requirement, and the FHA works with homeowners who don\'t have a lot of money to work with up front.

Other Mortgage Types

There are almost a dozen different types of mortgages available to meet the needs of almost any type of homebuyer. There are hybrid model mortgages that offer unique terms to the homebuyer, and specialty mortgages that are only available to active or retired military servicemen and their families. Minorities and underprivileged homebuyers may be able to get additional assistance with applying for and securing a mortgage to move from a rental home and purchase their own home.

The main thing to consider when taking on any type of mortgage is whether or not you can truly afford what you are purchasing. Many people take advantage of the intriguing terms of mortgages that defer or lower payments in the beginning, only to increase drastically as the mortgage continues. Sit down with your finances and get an accurate picture of what you can afford, and do not cross that threshold. Otherwise, you may find yourself comfortable with your mortgage, only to forget that in five or ten years, you will no longer be able to afford your payments, and could lose your house and the money you\'ve put into it already. Buy responsibly, and make sure you find a mortgage that fits your financial situation best.