Mortgage types can vary greatly from lender to lender and from state to state. The most popular type of mortgage is the standard fixed rate mortgage. They come in several flavors. The two most common are the 30 year fixed mortgage and the 15 year fixed mortgage. Most conventional banks and lenders, including internet banks, offer these types of loans. They are great for someone who needs a fixed budget and a definite end to a loan. Your interest rate could be higher on these but it will always be the same. Some lenders offer discounts if you use in-house brokers or have existing accounts with them.
The next popular types are the Adjustable Rate Mortgages (ARMs). These are great when interest rates are high and you only plan to stay in a house for 5 years or less. They offer a much lower interest rate during the beginning of the loan. However after a predetermined amount of time their rate will climb higher than a standard fixed mortgage. Be sure you investigate your options when considering this type of loan.
One of the newer types on the market are the Interest Only Mortgages. This is more suited for people who need to lower their budget for a short period of time. This is great for people with a job shift or budget crisis. The borrower will make payments that consist of interest only. The balance of the loan will not be reduced during this time frame. The interest only payments typically only last 5-10 years of the loan. The borrower can make payments towards the principle if they'd like. This is a good solution to temporary life changes.
The typical reduction in payments can be about $ 90 per $ 100,000 in loan value, based on 6.25%. This is not a long term solution and should be replaced by another solution when the temporary budget crisis is over. This is only a small sample of what is out there. When seeking a loan be sure to do your research and homework before picking any particular mortgage type.