Lenders offer a variety of mortgage products tailored to the needs of the borrower and the conditions prevailing in the secondary markets. The myriad of products may seem confusing and perhaps frustrating. However, despite the differences, it is important to realize that all products represent an extension of credit to a qualifying borrower against a pledge to return the principal with interest and where the pledge is collateralized by real estate. The difference among the loan products is due to the various features and options that they offer. These features and options can be referred to as Loan Characteristics. The key for the borrower is finding a mortgage loan product whose features would meet his/her individual needs. For the lender it is important that the loan products can easily be absorbed and traded in the secondary or capital markets.
Loan products have been classified in different ways based on various characteristics. Below is a description of different loan categories.
Updated: May 22, 2013