Fixed Rate Mortgages
- 30 year fixed
- 15 year fixed
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- 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
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- Higher interest rate
- Higher mortgage payments
- Rate does not drop if interest
rates improve
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Adjustable Rate Mortgages
- 10/1 ARM
- 7/1 ARM
- 3/1 ARM
- 1 year ARM
- 6 month ARM
- 1 month ARM
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- 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
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- More risk
- Payments may change over time
- Potential for high payments if
rates go up
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Balloon Mortgages
- 7 year
- 5 year
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- 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.
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- 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
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First Time Buyer Programs |
- Lower down payment
- Easier to qualify
- Sometimes you may
get lower rates
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- 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.
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Stated Income Programs |
- Don’t need to
verify income
- Faster approval
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- Higher rates
- Higher down payment
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No point, No fee Programs |
- No closing costs
- Less money required
to close
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- Higher rates
- Higher payments
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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
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- Higher rates
- Terms may not be as favorable
- Harder to get long term fixed loans
- Loans may have prepayment penalties
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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
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- Rates can change. The maximum
interest rate is normally high.
- Payments can change
- Harder to refinance your first
mortgage
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Home Equity Fixed Loan |
- Fixed payments
- Interest may be tax
deductible
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- Higher interest rates than on 1st
mortgages
- Harder to refinance your first
mortgage
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