An endless choice of home mortgage loans has made it difficult to decide which one to go for. In such a situation, a basic awareness of the different types of mortgages makes it easier to select the option best for your financial situation.

1.Fixed Rate Mortgage
When the home loan is at a fixed rate of interest all through the life of the loan it is known as fixed rate home mortgage loan. Although the term for this fixed rate mortgage is 10, 15, or 30 years. This type of mortgage is good for people who want to stay in the same home for more then 8 to 10 years.

2.One Year ARM
Adjustable rate mortgages means that your payment can decrease or increase every year according to the index for the entire life of the loan. The home owner must be prepared for instable payments. In case you have entered into this type of loan arrangement and are not happy you can always go for refinance later and get a more stable loan.

3.10/1 Year Adjustable Rate Mortgage
The interest rate is the same for 10 years with this mortgage. From the 11th year the rate of interest starts changing every year as per the index chosen by the lender.

4.Balloon Mortgage
A mortgage which you have to pay back fully over the term of the note, thus leaving a balance due at maturity is known as balloon mortgage. The reason it is called a balloon payment is because the final payment is large in size. The interest rate of a balloon payment home loan mortgage may be fixed or floating.

5.7/1 Year ARM
This is same as 10/1 ARM, with a different life term. The interest rate is same for 7 years but will change according to the index from the 8th year. This plan will cause the monthly payment to vary every year thereafter. You can go for this type of mortgage if you are not planning to stay for more then 7 years. In other words, you can have stable payments for the time you are in the house and then pass it on to another purchaser.

6.7/23 Mortgage
This is a two-step mortgage. If you put two fixed rate mortgages together you will get a 7/23 home mortgage loan. The monthly payment does not waver for first 7 years and then from the 8th year your payment will change and you will be charged according to the current rate of interest. But then it will stay the same for the life of the loan. Similar to the 7/23, there is a mortgage for 5 years and then changes on the 6th year. This mortgage is good for people who are ready to take some risk as the rate of interest may increase or decrease.

Generally these mortgages fall under four main groups: adjustable, two-step, fixed, and balloon with negotiable terms and length of the home loan mortgages.