• California is a leader in long-term mortgages because of the high cost of homes in the state.Jupiterimages/Creatas/Getty Images
  
  Home loans are "loans used to purchase property by residential home owners and property investors," according to the Investing Online Directory. Often referred to as a mortgage, a home loan is provided by a mortgage lender in exchange for collateral in the form of a lien against the property should the homeowner fail to meet repayment obligations. California's housing market has given rise to different types of home loans.
  
  

50-Year Fixed Mortgage

• The 50-year fixed-rate mortgage is a home loan product associated with California. In his 2006 article for Bankrate called "50-year mortgage debuts in California," Holden Lewis explains that California was the first state in which mortgage lenders offered mortgage customers a 50-year fixed-rate mortgage product. In his article, Lewis explains that 50-year mortgages present obvious benefits of spreading mortgage repayment costs over 50 years, thus reducing monthly payments and enabling buyers to get higher priced homes. It is preferable to an interest-only loan for many people. However, the long repayment term slows the pace of equity build-up relative to more traditional 30-year fixed mortgages.
  
  

40-Year Fixed Mortgage

• Prior to the 50-year fixed mortgage, California was a leader in the evolution of the 40-year mortgage. This initial expansion of the traditional 30-year loan term began to take hold shortly after the start of the 21st century. Lewis references Alex Diaz Jr., vice president of Statewide, who indicated at the time of the 2006 article that about one-fourth of all California mortgages were 40-year mortgages. California leads the way in longer fixed mortgage terms because of the high cost of homes. Randal O'Toole notes that California has the least affordable homes in the United States in his 2007 article "Why California Home Prices are So High." Homeowners need longer repayment terms and lower monthly payments to afford the cost of California living.
  
  

Payment-Option ARMs

• Diaz is also quoted as saying that payment-option adjustable rate mortgages (ARMs) are a common option for California homeowners who need an affordable monthly payment. Again, as opposed to a straight interest-only loan, a payment-option ARM gives homeowners an option to build some equity in their homes. GMAC defines a payment-option ARM as "an adjustable rate mortgage offering up to four payment choices. These payment choices impact the repayment of the loan differently." Many of these loan products allow you to change your payment monthly--to pay extra principal when you can or pay interest only or, when needed, pay less than interest owed (which increases principal).