Fixed Rate Mortgages
- 30 year fixed
- 15 year fixed
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- Your 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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- Usually higher interest rates
- Higher mortgage payments
- 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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- You'll have a lower monthly payment during the initial fixed period
- Rates and payments may go down if rates improve
- Qualify for higher loan amounts and/or a better home
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- Payments may and usually do change after initial fixed period
- Potential for higher 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 |
- No down payment/ no closing costs programs available
- Easier to qualify
- Usually have a manditory first time homeowners class
- You might be able to get lower rates
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- More documentation and verifications of all income and assets
- You more than likely will be subject to income and property value limitations
- Some programs have government subsidies and you might have a recapture tax and/or a percentage owed back, if you sell or refinance the home too early.
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| Stated Income Programs |
- Don’t need to show paystubs and/or tax returnes to verify income
- Faster approval
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- Higher rates or
- Higher closing costs
- Need a higher credit score
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| No point, No fee Programs |
- No closing costs
- Less money required to close
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- Higher rates
- Higher closing costs
- Higher payments
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| Imperfect Credit Programs |
- You are able to reestablish your 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
- Higher closing costs
- Harder and more costly to get long term fixed loans
- Loans more than likely will have prepayment penalties
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| 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
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- Rates change after initial fixed period and the maximum interest rate is normally high.
- Payments can change
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| Home Equity Fixed Loan |
- Fixed payments over life of loan
- Interest may be tax deductible
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- Higher interest rates than on your 1st mortgage
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