In conventional loans property is the only secure guarantee.
Conventional loans that follow the terms and conditions established by the guidelines of Fannie Mae and Freddie Mac. Conforming loans are those traditional loans that act upon the guidelines established by Fannie Mae and Freddie Mac.
On a fixed rate loan you can’t change the principal payment or the interest rate.Your escrow account payments can change every year because tax ratios and insurance rates change every year.
Variable or Adjustable-Rate Mortgage
In this kind of loan, interest rate also varies from time to time. There is an index that sets the changes of interest rate and the changes are always periodic. Definite amount of numbers is added to that index to get new interest rate of your loan.
This kind of loan is usually based on a 30-year fixed rate loans amortization schedule and you have to pay a big amount after every term that is usually 3,5 or 7 years long and it is a fixed-rate mortgage. The interest rate on balloon loans is usually less than a 15- or 30-year fixed-rate mortgage.Interest rate in balloon loan is less in 15 years while high in 30 years.