|
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
|
|
|
|
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
|
