| Loan Programs | Advantages
| Disadvantages
|
30 year Fixed
15 year Fixed
| - Monthly payments won't change
- Interest rate Fixed
- 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 (ARMS)
| - 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
| - 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
|
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
|
