The most common type of mortgage program where your monthly payments for interest and principal never change.  Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable.

Fixed-rate mortgages are available for 30 years, 20 years, 15 years and even 10 years.  There are also "bi-weekly" mortgages, which shorten the loan by calling for half the monthly payment every two weeks.  (Since there are 52 weeks in a year, you make 26 payments, or 13 "months" worth, every year.)

Fixed rate fully amortizing loans have two distinct features.  First, the interest rate remains fixed for the life of the loan.  Secondly, the payments remain level for the life of the loan and are structured to repay the loan at the end of the loan term.  The most common fixed rate loans are 15 year and 30 year mortgages.

During the early amortization period, a large percentage of the monthly payment is used for paying the interest.  As the loan is paid down, more of the monthly payment is applied to principal.  A typical 30 year fixed rate mortgage takes 22.5 years of level payments to pay half of the original loan amount.

Balloon loans are short term mortgages that have some features of a fixed rate mortgage.  The loans provide a level payment feature during the term of the loan, but as opposed to the 30 year fixed rate mortgage, balloon loans do not fully amortize over the original term.  Balloon loans can have many types of maturities, but most balloons that are first mortgages have a term of 5 to 7 years.

At the end of the loan term there is still a remaining principal loan balance and the mortgage company generally requires that the loan be paid in full, which can be accomplished by refinancing.  Many companies have other options such as a conversion feature at the end of the term.  For example, the loan may convert to a 30 year fixed loan at the thirty year market rate plus 3/8 of a percentage point.  Your conversion can be guaranteed based on certain criteria such as having made your last 24 payments on time.  The balloon mortgage program with the conversion option is often called a 7/23 Convertible or 5/25 Convertible.

These loans generally begin with an interest rate that is 2-3 percent below a comparable fixed rate mortgage, and could allow you to buy a more expensive home.

However, the interest rate changes at specified intervals (for example, every year) depending on changing market conditions; if interest rates go up, your monthly mortgage payment will go up, too.  However, if rates go down, your mortgage payment will drop also.

There are also mortgages that combine aspects of fixed and adjustable rate mortgages - starting at a low fixed-rate for seven to ten years, for example, then adjusting to market conditions.  Ask your mortgage professional about these and other special kinds of mortgages that fit your specific financial situation.

If you need to borrow money, home equity lines may be one useful source of credit.  Initially at least, they may provide you with large amounts of cash at relatively low interest rates and they may provide you with certain tax advantages unavailable with other kinds of loans.  (Check with your tax advisor for details.)

At the same time, home equity lines of credit require you to use your home as collateral for the loan.  This may put your home at risk if you are late or cannot make your monthly payments.  Those loans with a large final (balloon) payment may lead you to borrow more money to pay off this debt, or they may put your home in jeopardy if you cannot qualify for refinancing.  If you sell your home, most plans require you to pay off your credit line at that time.  In addition, because home equity loans give you relatively easy access to cash, you might find you borrow money more freely.

Remember too, there are other ways to borrow money from a lending institution.  For example, you may want to explore second mortgage installment loans.  Although these plans also place an additional mortgage on your home, second mortgage money usually is loaned in a lump sum, rather than in a series of advances made available by writing checks on an account.  Also, second mortgages usually have fixed interest rates and fixed payment amounts.

A reverse mortgage is a special type of loan made to older homeowners (ages 62 and up) to enable them to convert the equity in their home to cash to finance living expenses, home improvements, in-home health care, or other needs.

With a reverse mortgage, the payment stream is "reversed".  That is, payments are made by the lender to the borrower, rather than monthly repayments by the borrower to the lender, as occurs with a regular home purchase mortgage.

A reverse mortgage is a sophisticated financial planning tool that enables seniors to stay in their home -- or "age in place" -- and maintain or improve their standard of living without taking on a monthly mortgage payment.  It is different from a home equity loan or line of credit, which many banks and thrifts offer.  With a home equity loan or line of credit, an applicant must meet certain income and credit requirements, begin monthly repayments immediately, and the home can have an existing first mortgage on it.  In addition, there is no restriction on the age of borrowers.

In general, reverse mortgages are limited to borrowers 62 years or older who own their home free and clear of debt, or nearly so, and the home is free of tax liens.

Seniors do not have to meet income or credit requirements to qualify for a reverse mortgage, and usually have a choice of receiving the proceeds from the mortgage in the form of a lump-sum payment, fixed monthly payments for life, or line of credit.  Some types of reverse mortgages also allow fixed monthly payments for a finite time period, or a combination of monthly payments and line of credit.  The interest rate charged on a reverse mortgage is usually an adjustable rate that changes monthly or yearly.  However, the size of monthly payments received by the senior doesn't change.