| 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
- Abot to 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 Cost Mortgage or No point, No fee Programs |
| |
- No closing
costs
- Less money required to
close
|
- Higher
rates
- Higher
payments
|
|
| Less than Perfect 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
|
