| Loan
Programs |
Advantages |
Disadvantages |
| 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 (ARM) |
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
|
|
| |
| Stated
Income Programs |
| |
- Don't
need to verify income
- Faster
approval
|
- Higher
rates
- Higher
down payment
|
| |
| Imperfect
Credit Programs |
| |
- 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 (HELOC) |
| |
- 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
|
|
| Zero
$ Down |
| |
- 100%
financing for purchases and refinancing
- 103%
and 107% financing for purchases (can include closing
costs in loan amount)
|
- Increases
loan amount (example
103%)
value of home=$250,000 + $7,500(3%)=$257,000
(no money for down payment or closing costs needed...it
is rolled into the loan) |
