| 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
|
|
