Hi Margaret!
Different races can interbreed, however the children always breed true. As an example, I actually play the exact combination that you mentioned, product of a Goblin and Hobgoblin, however my character came out as a Goblin and has those particular racial abilities. In a case like this the Fringe Race option is not necessary.
When in doubt you can reach out on our New Player forum with ideas for your backstory and one of our incredibly helpful New Player Marshals can assist or bring in one of the Storytellers.
In Service to Travance
Ser Winks Sharpthorn, The Resolute
Knight of Drega'Mire
Soul-Blade of Galladel
image missing http://www.knightrealms.com/images/sigils/Dregamire-Knight-Small.png
Alt: William Sterling
Chief Mechanic of the Kormyrian Sky Flotilla
Lead Engineer of the Travancian Railroad
OOG: Walter Soto
Marshal
Cannon Marshal
