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Years you plan to stay in the house
Recommended program
1-3
3/1 ARM, 1 year ARM or 6 month ARM
3-5
5/1 ARM
5-7
7/1 ARM
7-10
10/1 ARM, 30 year fixed or 15 year fixed
10+
30 year fixed or 15 year fixed

FIXED RATE MORTGAGES
Term Advantages Disadvantages
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
Term
Advantages
Disadvantages
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
BALLOON MORTGAGES
Term
Advantages
Disadvantages
7 year
5 year
  • 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 BUYERS PROGRAMS
Term
Advantages
Disadvantages
Varies
  • Lower down payment
  • Easier to qualify
  • Sometimes you may get lower rates
  • 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
Term
Advantages
Disadvantages
Varies
  • Don’t need to verify income
  • Faster approval
  • Higher rates
  • Higher down payment
NO POINTS, NO FEES PROGRAMS
Term
Advantages
Disadvantages
Varies
  • No closing costs
  • Less money required to close
  • Higher rates
  • Higher payments
IMPERFECT CREDIT PROGRAMS
Term
Advantages
Disadvantages
Varies
  • 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
Term
Advantages
Disadvantages
Varies
  • 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
Term
Advantages
Varies
  • Fixed payments
  • Interest may be tax deductible
  • Higher interest rates than on 1st mortgages
  • Harder to refinance your first mortgage

Other unique programs available:

  • Purchase a house with $0 down
  • Piggyback loans 80-10-10 or 80-15-5. No PMI payments even with 5% or 10% down.
  • Debt consolidation programs
  • Home Improvement loans
  • Qualify even if you may have been turned down before
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