| 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
|
