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| Fixed Rate Mortgages |
| Adjustable Rate Mortgage (ARM) |
| First Time Buyer Programs |
| Interest Only Programs |
| No point, No fee Programs |
| Imperfect Credit Programs |
| Home Equity Line of Credit |
| Home Equity Fixed Loan |
| Other Loan Programs |
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Fixed Rate Mortgages
30 year fixed
15 year fixed
Advantages
- 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
Disadvantages
- Higher interest rate
- Higher mortgage payments
- Rate does not drop if interest rates improve
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Adjustable Rate Mortgage (ARM)
10/1 ARM
7/1 ARM
5/1 ARM
3/1 ARM
1 year ARM
6 month ARM
1 month ARM
Advantages
- Lower initial monthly payment
- Rates and payments may go down if rates improve
- May qualify for higher loan amounts
- 30 year term, no balloon payment
Disadvantages
- More risk
- Payments may change over time
- Potential for higher payments if rates increase
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First Time Buyer Programs
Advantages
- Lower down payment
- Easier to qualify
- Lower rates may be available
Disadvantages
- May be subject to income and property value limitations
- Some government subsidized programs may generate a recapture tax if you sell the house too soon
- Education courses may be required to qualify for these loans
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Interest Only Programs
Advantages
- You have several payment options
- Lower monthly payments
- Qualify for a higher loan amount
- Qualify at the interest only payment
- Option to pay the full normal payment
- Interest only payments for up to ten years
Disadvantages
- Higher rates
- Principal loan balance will not decrease during the interest only payment period
- Payment will be higher for the remaining term
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No point, No fee Programs
Advantages
- No out-of-pocket loan costs at closing
- Closing costs are paid from the lender rebate
- Less money required to close
- Refinance without increasing your loan amount
Disadvantages
- Higher rates
- Higher payments
- Some lenders may have a short payoff penalty which is usually charged to the loan broker, but may be passed on to you
- Some require a prepayment penalty for the first one to five years
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Imperfect Credit Programs
Advantages
- 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
Disadvantages
- 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 Line of Credit
Advantages
- You only borrow what you need
- Pay interest only on what you borrow
- Flexible access to funds
- Interest may be tax deductible
- May be free of closing costs
- A good source for an emergency fund, if set up in advance
- Can be used for debt consolidation and lower payments
- Rates are usually lower than consumer loan or credit card rates
Disadvantages
- Rates can change. The maximum interest rate can be relatively high
- Payments can change
- Harder to refinance your first mortgage
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Home Equity Fixed Loan
Advantages
- Fixed payments
- Interest may be tax deductible
- Get cash out for any purpose
Disadvantages
- Higher interest rates compared to first mortgage
- Harder to refinance your first mortgage
- Interest is paid on the entire loan amount, compared to an equity line of credit
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Other Loan Programs
- Purchase your home with no down payment.
- Piggyback loans: 80-10-10 or 80-15-5. Avoid PMI payments.
- Debt consolidation programs.
- Home Improvement loans.
- You may qualify even if you've been turned down before!
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Unless otherwise indicated, these APR calculations are based on the following: Conforming loans (whose maximum loan amount is below $417,000 for the contiguous states, District of Columbia, and Puerto Rico or below $625,500 for Alaska, Guam, Hawaii and the Virgin Islands) are calculated based on a loan amount of $417,000 with closing costs of $8,340. Jumbo Loans (whose maximum loan amount exceed $417,000 for the contiguous states, District of Columbia, and Puerto Rico or exceed $625,500 for Alaska, Guam, Hawaii and the Virgin Islands) are calculated based on a loan amount of $500,000 with closing costs of $10,000. Your actual APR may be different depending upon these factors.
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