Some lenders offer bi-weekly mortgages, which call for 26 payments per year. The details of bi-weekly mortgages can differ, so it's best to ask the lender to outline the details of how these programs work. A word of caution regarding bi-weekly mortgages: A number of companies offer bi-weekly mortgage programs that require the borrower to send their mortgage payment to a party that is not the lender. Borrowers should exercise caution to ensure that these payments will be sent to the lender on a timely basis and that the borrower, not the third party, receives the benefit of making bi-weekly payments.

Homebuyers who can afford the higher monthly payment sometimes prefer a 15-year mortgage to a 30-year mortgage. Interest rates on 15-year mortgages usually are slightly lower than 30-year rates. In addition, a homebuyer financing a home purchase with a 15-year mortgage will repay principal substantially faster and will pay far less total interest over the term of the loan.

Conventional Mortgages
A conventional mortgage is one that is not insured or guaranteed by the government. Conventional loans with a down payment of less than 20% typically require private mortgage insurance (PMI), which protects the lender if the homeowner defaults on the loan. For more information about conventional loans, please check the Web sites of Fannie Mae and Freddie Mac, the two primary purchasers of conventional loans. Please note that Fannie Mae and Freddie Mac do not lend money to home buyers, rather, these organizations and other investors purchase loans that have been made to home buyers by mortgage lenders.

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