Mortgage Characteristics At-a-Glance

It can be difficult to understand the different characteristics of different mortgage types and what they mean to the borrower. Here is a basic comparison. For more in-depth information, speak with your lender.

Type of Mortgage	Characteristics	May be best for a borrow who:
Fixed-rate mortgage	Interest rate remains the same for the entire term of the loan, regardless of the term length. If your monthly mortgage payment includes taxes and insurance, your monthly payment may change as those costs change.	Plans to live in property more than 10 years. Prefers to know that the monthly mortgage rate will never change. Is a first time homebuyer.
Adjustable-rate mortgage	Interest rate is adjusted at specific times during the loan, so payment may change each time the interest rate is adjusted for the life of loan.	Has the financial stability to manage to changes in the monthly mortgage payment as the interest rate and monthly payment periodically fluctuates.
Balloon mortgage	Interest rate and monthly payment remain the same for the initial term of the loan and at the end of the initial term the loan is re-set to a fixed rate or paid off in full.	Plans to sell the home before the end of the loan term; AND Has the financial stability to manage changes in the monthly mortgage payment when the initial balloon mortgage matures, or be prepared to pay off the remaining balance of the mortgage if choosing to not reset the mortgage.
Reverse Mortgage (also known as a Home Equity Conversion Mortgage – HECM)	Homeowners can either receive monthly payments from the lender or access a line of credit that does not need to be repaid as long as the owners live in the home.	Homeowners who are at least 62-years old who would like to supplement their retirement. Retirees who are "house rich" but "cash poor. Do not plan to leave the house to their children as an inheritance.