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Loan
Programs
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Pros
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Cons
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Fixed
Rate Mortgages
>>30
year fixed rate
>>15 year fixed rate
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>>Monthly payments are
fixed over the life of the loan
>>Interest rate doesn't
change
>>Can refinance loan
if rates go down
>>Rate
is protected if rates go up
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>>Higher mortgage payments
>>Higher interest rates
>>Rate does not go down
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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>>Initially you will
have lower monthly payment
>>Lower payments over
a shorter period of time
>>Could qualify for
larger loan amounts
>>Rates and payments
may go down if rates improve
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>>Riskier
>>Risk of higher payments
if rates go up
>>Payments may change
over time
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Balloon
Mortgages
>>7 year
>>5 year
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>> Lower monthly payment,
initially
>>Balloon mortgages
offer the option to convert to a new loan after the
initial term, most times
>>Lower payment over
a shorter period of time
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>>Potential of rates
being higher at the end of the initial fixed period
>>Risk of foreclosure
if balloon payment cannot be made, if you cannot refinance,
or if you cannot use the conversion option
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First Time Buyer Programs
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>>Low down payment
>>It is possible to
get lower rates
>>Easy to qualify
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>>Some programs which
have government subsidies could have a recapture tax
if you sell the house early
>>Could be subject to
property value & income limitations
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Stated Income Programs
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>>Doesn't need to verify
your income
>>Quicker approvals
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>>Higher rates
>>Larger down payments
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No
point, No fee Programs
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>>No closing costs
>>Less money needed
to close
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>>Higher rates
>>Larger payments
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Imperfect Credit Programs
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>>Potential for re-establishing
credit if you make your loan payments on time.
>>You may be able to
reduce your monthly debt payment, when used for debt
consolidation
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>>Higher rates
>>Harder to get long
term fixed loans
>>Loans may have penalties
on prepayment
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Home Equity Line of Credit
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>>Pay interest only
on what you borrow
>> You only borrow what
you need
>>Interest may be tax
deductible
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>> Rates can change
>>Payment can change
>>Interest rates are
typically high
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Home Equity Fixed Loan
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>>Fixed
payments
>>Interest can possibly
be tax deductible
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>>Higher
interest rates than on 1st mortgages
>>Can
make it harder to refinance your first mortgage
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