| Loan
Programs |
Advantages |
Disadvantages |
| |
| Fixed
Rate Mortgages |
30
year fixed
15 year fixed |
- Monthly payments
are fixed over the life of the loan
- Interest rate
does not change
- Protected if
rates go up
- Can refinance
if rates go down
|
- Higher interest
rate
- Higher mortgage
payments
- Rate does not
drop if interest rates improve
|
| |
| Adjustable
Rate Mortgages |
10/1 ARM
7/1 ARM
3/1 ARM
1 year ARM
6 month ARM
1 month ARM |
- Lower initial
monthly payment
- Lower payment
over a shorter period of time
- Rates and payments
may go down if rates improve
- May qualify
for higher loan amounts
|
- More risk
- Payments may
change over time
- Potential for
high payments if rates go up
|
| |
| Balloon
Mortgages |
7 year
5 year |
- Lower initial
monthly payment
- Lower payment
over a shorter period of time
- Many balloon
mortgages offer the option to convert
to a new loan after the initial term.
|
- Risk of rates
being higher at the end of the initial
fixed period
- Risk of foreclosure
if you cannot make balloon payment
or if you cannot refinance or if you
cannot exercise the conversion option
|
| |
| First
Time Buyer Programs |
| |
- Lower down
payment
- Easier to qualify
- Sometimes you
may get lower rate
|
- May be subject
to income and property value limitations
- Some programs
which have government subsidies may
have a recapture tax if you sell the
house too early.
|
| |
| Stated
Income Programs |
| |
- Don't need
to verify income
- Faster approval
|
- Higher rates
- Higher down
payment
|
| |
| No
point, No fee Programs |
| |
- No closing
costs
- Less money
required to close
|
- Higher rates
- Higher payments
|
| |
| Imperfect
Credit Programs |
| |
- Potential for
reestablishing credit if you pay your
mortgage on time.
- When used for
debt consolidation, you may be able
to reduce your monthly debt payment
|
- Higher rates
- Terms may not
be as favorable
- Harder to get
long term fixed loans
- Loans may have
prepayment penalties
|
| |
| Home
Equity Line of Credit |
| |
- You only borrow
what you need
- Pay interest
only on what you borrow
- Flexible access
to funds
- Interest may
be tax deductible
|
- Rates can change.
The maximum interest rate is normally
high.
- Payments can
change
- Harder to refinance
your first mortgage
|
| |
| Home
Equity Fixed Loan |
| |
- Fixed payments
- Interest may
be tax deductible
|
- Higher interest
rates than on 1st mortgages
- Harder to refinance
your first mortgage
|
