Tips on Adjustable Home Loans

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Understanding mortgage graphs and adjustable home loans is important when buying a house. See why in this free video on real estate and bank loans.

Part of the Video Series: How to Pick a Mortgage
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Video Transcript

Another loan that is popular is called the Option Adjustable Rate Loan. This is a loan where you have four different payments. The interest rate on this is exceedingly low when you come in and again, this is set up for someone who is in a situation that their job is tentative or they're in a occupation where it's seasonal so they want to have a payment plan that's flexible for them for the particular job or situation that they're in. The four payments are broken down into, when it comes to your house, it will be a fifteen year payment, a thirty year payment, an interest only payment, and this is something new that we're talking about right now, it's called a minimum payment. The minimum payment is below the interest only payment and that comes in handy if something, an unexpected emergency comes up, somebody loses their job, they can go and make the minimum payment. Now the minimum payment pays nothing on principle. In fact, it's called a negative amortization. That means that you're putting money back on principle. What comes in handy with this is that it's the cheapest loan that you have out there and we'll get into more of that in the next segment coming up.


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