There are three basic mortgage types, according to Bankrate, and they include fixed-rate, adjustable-rate and interest-only jumbo loans. With a fixed-rate loan, the borrower's interest rate remains constant over the 15-, 20- or 30-year loan repayment period. Monthly payment installments are consistent as well.
In contrast to a fixed rate, an adjustable-rate mortgage has a fluctuating interest rate. Typically, an ARM has an initial period with a lower upfront rate. After this initial period, which is often five years, the rate adjusts based on mortgage securities and loan cost factors, explains Bankrate. An interest-only jumbo loan is for a high amount, and it allows the borrower to pay just interest each month for five to 10 years.