Mortgage types

• Adjustable rate mortgage
  Adjustable rate mortgage
  A variable-rate mortgage, adjustable-rate mortgage , or tracker mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. The loan may be offered at the lender's standard variable...
  
   or ARM - A mortgage where the interest rate adjusts relative to a specified index + margin. Eg. COFI, LIBOR etc.
• Hybrid ARM - An adjustable rate mortgage wher the initial 'start' rate is fixed for some portion of time (3,5,7, or 10 years) thereafter the interest rate adjusts (yearly or bi-annually) based on the sum of a specified index + margin. Eg. 2/28 Arm, 3/1 Arm, 5/1 Arm, 7/1 Arm, 10/1 Arm, 3/6month arm, etc...
• Fixed rate mortgage
  Fixed rate mortgage
  A fixed-rate mortgage is a mortgage loan first developed by the Federal Housing Administration where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or "float." Other forms of mortgage loan include interest only...
  
   or FRM - A mortgage where the interest rate and payment are fixed for the term of the loan.
• Negative amortization
  Negative amortization
  In finance, negative amortization, also known as NegAm, deferred interest or graduated payment mortgage, occurs whenever the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases...
  
   mortgage - where the payment may be less than the monthly acrued interest, and the outstanding interest is capitalized monthly into the loan balance.
• Balloon payment mortgage
  Balloon payment mortgage
  A balloon payment mortgage is a mortgage which does not fully amortize over the term of the note, thus leaving a balance due at maturity. The final payment is called a balloon payment because of its large size. Balloon payment mortgages are more common in commercial real estate than in...
  
   - A mortgage most commonly used in commercial real estate. The Balloon payment mortgage does not fully amortize over the term of the note, which leaves a balance due at maturity, known as a "balloon payment."
• Interest only mortgage - A type of mortgage where the borrower pays only the accruing interest on the principal balance. These payments on interest leave the principal balance unchanged.

Terminology

• Yield spread premium
  Yield spread premium
  A yield spread premium is the money or rebate paid to a mortgage broker for giving a borrower a higher interest rate on a loan in exchange for lower up front costs, generally paid in Origination fees, Broker fees or Discount Points...
  
  
• A par rate is the lowest interest rate a borrower qualifies for, given by the lender.
• Reset: interest rate and thus payments change periodically on ARMs.