A mortgage is a loan secured by real property. The property is the collateral the lender utilizes to secure the loan being granted. The loan amount is usually determined by the value of the property, income, property type and guidelines that fluctuate based on occupancy and geographical location of the property.
Conforming Mortgage is a mortgage that meets all the terms and conditions set by Fannie Mae and Freddie Mac. The terms include maximum loan amount, credit worthiness, required documentation and suitability of the property. The rates on conforming loans can be Fixed, adjustable, or interest only.
Fixed rate mortgages usually carry a higher interest rate than adjustable rate mortgages. The higher rate is due to the fact that the lending institution (note holder) will be committed to a mortgage note with a lower yield than the market in the future. There is no cookie cutter formula for selecting the right mortgage. The decision between a fixed rate or and adjustable rate mortgage has to be based on variable personal factors such as the terms and fees offered, current interest rates and the expected term of occupancy.
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