A home loan is different from other consumer loans. If you cannot pay your home loan in time, you could lose your home.

Types of Loans

There are many types of loans from which to choose

• Fixed rate
  
• Adjustable rate
• Balloon payment
  
• Negative amortization,

To get these loans you may need the help of your mortgage broker.

In balloon payment, the payment only covers the interest. This is also called interest-only loan or partially amortizing loan, where the monthly payment is lower, as you are paying only the interest. The unpaid principal is paid in one or two balloon payments.

In fully amortized loan, your each month’s payment includes both principal and the interest until the loan is paid off fully.

A negative amortizing or deferred interest loan contains payment options that may not pay the full amount of interest due in each month. The interest will have to be paid by much higher payments depending on your contract. If a lender offers you a loan with very low rate of interest, consult with your broker, it may contain negative amortization.

The mortgage broker will help you in deciding the length of the loan term. Generally, the longer the term loan, the lower your monthly payments. California has a high fee/rate covering law, which contains payment procedures, prepayment penalties, the borrower’s ability to repay the loan, refer www.dre.ca.gov