Final answer:
Non-traditional mortgage products differ from standard fixed-rate mortgages, often featuring adjustable rates, interest-only payments, or potential for negative amortization. These products can also have loose lending criteria, including low down-payments and minimal income verification.
Step-by-step explanation:
Non-traditional mortgage products are defined as home loan options that differ from conventional 15-year or 30-year fixed-rate mortgages. They can include mortgages with adjustable interest rates, interest-only loans where principal payments are deferred, and negative amortization loans where the loan balance can increase over time.
Adjustable-rate mortgages (ARMs) can have fluctuating interest rates compared to the fixed rates of conventional loans.
Interest-only loans allow borrowers to pay just the interest for a designated period, with no principal reduction.
Subprime loans sometimes require little down-payment and may not thoroughly vet a borrower's income, leading to higher risks.