What are the different mortgage loan types?
There are many different types of mortgage loans. Though many people simply think of mortgages as a loan used to buy a home, in reality a mortgage is any type of loan that is secured by home equity. Different types of mortgages serve different purposes – to buy a home, borrow cash, cover a down payment, refinance an existing mortgage, etc.
Mortgage loan types also vary based on how the loan is structured, how interest is charged, how they are repaid and the institutions backing them. Some are designed for a very narrow purpose, such as covering all or part of a down payment, while others are used for a broad range of purposes.
To help you sort through your options, the following three tables provide a breakdown of the different types of mortgage loans, their descriptions, how they're used, their pros and cons and the types of borrowers they may or may not be suited for. Note that a single loan may combine features of one or more types.