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| Fixed Rate Mortgages |
| Adjustable Rate Mortgages |
| Balloon Mortgages |
| First Time Buyer Programs |
| Stated Income Program |
| No point, No fee Programs |
| Imperfect Credit Programs |
| Home Equity Line of Credit |
| Home Equity Fixed Loan |
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Fixed Rate Mortgages
30 year fixed
15 year fixed
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Advantages:
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
Disadvantages:
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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Advantages:
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
Disadvantages:
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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Advantages:
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.
Disadvantages:
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
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Advantages:
Lower down payment
Easier to qualify
Sometimes you may get lower rate
Disadvantages:
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 Program
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Advantages:
Don't need to verify income
Faster approval
Disadvantages:
Higher rates
Higher down payment |
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No point, No fee Programs
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Advantages:
No closing costs
Less money required to close
Disadvantages:
Higher rates
Higher payments |
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Imperfect Credit Programs
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Advantages:
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
Disadvantages:
- 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
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Advantages:
You only borrow what you need
Pay interest only on what you borrow
Flexible access to funds
Interest may be tax deductible
Disadvantages:
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
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Advantages:
Fixed payments
Interest may be tax deductible
Disadvantages:
Higher interest rates than on 1st mortgages
Harder to refinance your first mortgage |
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Unless otherwise indicated, these APR calculations are based on the following: Conforming loans (whose maximum loan amount is below $417,000 for the contiguous states, District of Columbia, and Puerto Rico or below $625,500 for Alaska, Guam, Hawaii and the Virgin Islands) are calculated based on a loan amount of $359,650 with closing costs of $7,193. Jumbo Loans (whose maximum loan amount exceed $417,000 for the contiguous states, District of Columbia, and Puerto Rico or exceed $625,500 for Alaska, Guam, Hawaii and the Virgin Islands) are calculated based on a loan amount of $1,000,000 with closing costs of $20,000. Your actual APR may be different depending upon these factors.
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