Now that you've decided to purchase a home, you will want to consider what type of loan is right for you. There are two kinds or loans, each with many varying factors. At TLC Lending, you will work with a loan consultant who will help you determine the right loan for you. The two kinds of loan you will be deciding between are fixed rate mortgage and adjustable rate mortgage.

A long-term real estate loan is paid over a set number of years. The rate, or percentage of interest paid, remains consistent over the life of the loan.

A long-term, fully amortized loan works out well for many borrowers. Amortization is the process of principal and interest being paid each month until the entire loan is paid off. You, as the borrower, will have the same payment each month because your loan has been spread out over the life-time of the loan, which is a pre-determined number of years.

With a fixed-rate mortgage, borrowers have the option of refinancing in the future. Homeowners generally refinance for one of two reasons, either because they are able to secure a lower interest rate, or because they would like to pull money out of the property-perhaps for remodeling or debt consolidation.

With an adjustable rate loan, there is more room for flexibility. Adjustable rate loans usually start out with a lower interest rate (lower than a fixed rate loan), which saves you money at the beginning of your loan. However, because your adjustable rate mortgage loan is tied to the market index, it can fluctuate considerably. If the index goes up, your payments will too. While it is impossible to accurate predict what the index will do, adjustable rate mortgages comes with a "cap," meaning your interest rate can not go above or below pre-determined amounts.

Just like with Fixed Rate Mortgages, you always have the option of refinancing your loan later on, say for example, if the interest rate gets too high, making your monthly payments too steep.

Loan Costs

If you know what you want and you're prepared,