Fixed
Rate Mortgages:
- 30 year fixed
15 year fixed
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- 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
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- 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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- 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
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- 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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- 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
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- 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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- Lower down payment
Easier to qualify
Sometimes you may get lower rates
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- 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 Programs
-
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- Dont need to verify
income
Faster approval
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- Higher rates
Higher down payment
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No
point, No fee Programs
-
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- No closing costs
Less money required to close
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- Higher rates
Higher payments
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Imperfect
Credit Programs
-
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- 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
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- 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 Fixed Loan
-
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- Fixed payments
Interest may be tax deductible
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- Higher
interest rates than on 1st mortgages
Harder to refinance your first mortgage
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