|Home is among the fundamental needs of a human being. It is where a child feels the warmth of parental care and the sense of security. A youth finds his dream taking shapes in the comfortable environment of a home. A home is not only your only resting place but also the center of all your fun-filled activities. However, it becomes an uphill task to own a house for residential purpose owning to the burgeoning prices of real estate. One option is to rent a home, but the sense of freedom you get in your own home cannot be found there. Home loans offer a practical solution to help you buy a home of your dreams and enjoy living.
As the demand for financial assistance for buying residential properties is increasing day by day, different kinds of home loans are being available in the market by a variety of companies. These loan providing companies and banks offer different types of home loans for first time buyers as well as for existing homeowners. You need to take time in selecting the right kind of home loan products by understanding properly the different types of home loans available in the market. It is important to know the broad categories of home loans and the rates of interest chargeable for each of them before making a financial deal.
Most of home loan schemes available today fall in three major categories. These are as follows:
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- Fixed Rate Home Loans: This type of home loan has a fixed interest rate which continues till the end of the loan term. If you have a predefined income schedule, then this kind of loan scheme suit you the best as you know in advance how much you need to pay each month towards the loan repayment. Depending upon your financial health you can choose between a 15 year loan term and a 30 year loan term. Fixed rate loan also protects you against inflation.
- Adjustable Rate Home Loans: The interest rate for this type of home loan can be adjusted as per the requirement of a borrower during the term of a loan. Adjustable rate home loans are gaining popularity as it can offer low interest rate to the borrower. An index supports the rise and fall in the rate of interests which causes the change in the monthly payment schedule.
- Hybrid Home Loans: You can get the best of the two world in a hybrid loan. This type of home loan is a blended form which has the features of fixed rate loan as well as adjustable rate loan. Such home loan often starts with a fixed rate loan and over a period of time switch over to adjustable type giving enough flexibility to homeowners.