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 rates
|
- 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
|
|
|
|
