Although you may see many different types of mortgages advertised, they all belong to just two families: those that carry fixed interest rates and those with rates that change during the course of the loan on a periodic schedule agreed upon by you and your lender.

 
Fixed-Rate Mortgage- A common type of mortgage is the fixed-rate mortgage.

Adjustable-Rate Mortgages - If you're buying for the first time, frequently moving, looking for a way to qualify for a more expensive house than you'd normally expect for your income level, or just looking for more creative ways to finance, you should look into adjustable-rate mortgages (ARMs).

Balloon Mortgages  - With a balloon mortgage, you’ll enjoy the advantages of an interest rate lower than those on other loans with a large lump sum payment due at the end of your loan.

Which Should You Choose?
That depends on you and your circumstances. Can you live with uncertainty about future rate changes? What income increases do you realistically expect in coming years? How long do you plan to live in the house? If you'll be moving in a few years, you might consider an ARM. But if you plan to stay put, a fixed-rate might be a better choice.