| 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
|
