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Mortgage Types

Mortgages come in 2 basic flavors: Fixed Rate and ARMs

Fixed Rate mortgages are loans that accrue interest at a rate that is constant for the term of the loan.

ARMs (Adjustable Rate Mortgages) are loans that accrue interest at a rate that will change periodically. The period length is determined by the type of mortgage. Generally, it will either be monthly, quarterly or yearly. The amount of the change depends on the index that the loan is based on. The interest rate is calculated by adding the current index and the loan's margin together.
Rate = index + margin

ARM vs. Fixed

In general, ARM loans are a better choice when interest rates are high and Fixed rate loans are the way to go when rates are low. There are exceptions for certain situations and more advanced investor deals.

Mortgage Insurance

Mortgage insurance is required by most lenders when the LTV is greater than 80%.

Fraud

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LTV/CLTV

LTV: Loan-to-Value, This ratio (percentage) is determined by dividing the outstanding loan amount (1st lien only) by the value of the home.
LTV = amountOwed / value

CLTV: Combined Loan-to-Value, This ratio (percentage) is determined by dividing the combined outstanding loan amount (of all liens) by the value of the home.
CLTV = combinedAmountOwed / value