For a layman like me, all this financial talk seems to confuse me even more. Unfortunately, mortgages are not something we can just forget exists, because at the end of the day, we will all need to live, and in order to live, we need a place to live in, and that is where mortgages come in. So what is a mortgage? A mortgage is a security in estate by a lender as a security for a debt. So what are mortgage rates? It is the rate or rate of interest applied to the loan as to be paid by the debtor. So let’s take a look at the different types of mortgage rates.

The first type would be fixed rate mortgage. I presume that a fixed rate mortgage is the most well known of all mortgages purely because it covers a property for a long term, and the rates are fixed throughout the term. There are four types of fixed rate mortgages, the first being 30 year fixed rate mortgages, the second being 15 year fixed rate mortgages, the third being biweekly mortgages and the last, “convertible” Mortgages. Although the best thing about a fixed rate mortgage is not having to worry that your interest rate would increase throughout the term, there is still the price factor in which the amount charged is higher compared to mortgages with fluctuating interest rates because you will be paying extra for that “security”, of knowing that your payments will never change.

Another one is called a premium mortgage rate. This type of mortgage rate is a hybrid of a fixed mortgage rate and an adjustable rate mortgage. This mortgage usually allows the buyer to experience the secured payment like with a fixed mortgage rate for a certain period of time, say 10 years, and then the rate is expected to fluctuate according to the variable conditions.

There are also adjustable mortgage rates. An adjustable rate mortgage is a mortgage whereby the rate of payment changes depending on variable indices. Some common indices in the United States would be the National Average Contract Mortgage Rate and the 12-month Treasury Average Index (MTA). These kind of mortgage is best for those not intending to keep a property for a long period of time, for example someone who is planning to move to another location after some time.

So among these mortgage rates, which would you pick? It entirely depends on what you need at the time and your ability to pay as well to find the best mortgage for you.

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