| Program Type |
Plus |
Minuses |
 |
| 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
3/27 ARM
2/28 ARM
|
- Lower
monthly payment at the start and during the
fixed period
- Qualify
for higher loan amounts
|
- More risk
- Payments change over time
- Higher payments if rates go up
|
|
|
| Balloon Mortgages |
7 year
5 year |
- Lower monthly payment at the start
and during the fixed period
- Many balloon mortgages offer the option to convert to a new loan after the initial term.
|
- Rates may increase 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
|
|
|
|
Less than perfect
Credit Programs |
| |
- Will help improve your credit scores
if you pay your mortgage on time.
- You may be able to reduce your
monthly payments if this is a refinance for
debt consolidation
|
- Higher rates
- Less favorable terms
- Often will have a prepayment penalty
|
|
|
| Home Equity Line of Credit
(HELOC) |
| |
- Borrow only the amount 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
|
