What are the different types of mortgages?

In Texas, there are two main types of mortgages: fixed-rate mortgages and adjustable-rate mortgages. Fixed-rate mortgages are the most common type of mortgage and are generally fixed for the entire length of the loan, usually 15 or 30 years. This means that the interest rate and monthly payments remain the same throughout the life of the loan. Adjustable-rate mortgages (ARMs) feature an interest rate that can change periodically throughout the loan. ARMs usually start off with a lower interest rate than fixed-rate mortgages, but the rate can fluctuate with the market. These mortgages are typically used when a borrower wants to purchase a home but is uncertain about how long they will stay in it. Other types of mortgages include jumbo mortgages, balloon mortgages, interest-only mortgages, and reverse mortgages. Jumbo mortgages are mortgages that exceed the conforming loan limits set by the Federal Housing Finance Agency. Balloon mortgages are mortgages that have a fixed interest rate for a certain amount of time and then the remaining balance is due in a lump sum at the end of the term. Interest-only mortgages allow borrowers to make payments based solely on the interest of the loan for a set period of time. Reverse mortgages are available to qualified homeowners age 62 and over and allow them to convert part of their home’s equity into cash.

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What are the different types of mortgages?

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