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Loan Programs


Which loan is right for me?

Years you plan to stay in home : Best Program

1-3 years : 3/1 ARM, 1 year ARM or 6 month ARM

3-5 years : 5/1 ARM

5-7 years : 7/1 ARM

7-10 years : 10/1 ARM, 30 year fixed, or 15 year fixed

10+ years : 30 year fixed or 15 year fixed

 

Fixed Rate Mortgages - 30 Year fixed & 15 Year fixed

Pros:

  • 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

Cons:

  • Higher interest rate
  • Higher mortgage payments
  • Rate does not drop if interest rates improve

Adjustable Rate Mortgages - 10/1 ARM, 7/1 ARM, 3/1 ARM, 1 year ARM, 6 month ARM, 1 month  ARM

Pros:

  • Lower initial monthly payment
  • Lower payment over a shorter period time
  • Rates and payments may go down if rates improve
  • May qualify for higher loan amounts

Cons:

  • More risk
  • Payments may change over time
  • Potential for high payments if rates go up

Balloon Mortgages - 7 year & 5 year

Pros:

  • Lower initial monthly payment
  • Lower payment over a shorter period of time
  • Many balloon mortgages offer the option to convert a new loan after the initial term

Cons:

  • 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

Pros:

  • Lower Down payment
  • Easier to qualify
  • Sometimes you may get lower rates

Cons:

  • 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

Pros:

  • Don’t need to verify income
  • Faster approval

Cons:

  • Higher rates
  • Higher payments

No point, No fee Programs

Pros:

  • No closing costs
  • Less money required to close

Cons:

  • Higher rates
  • Higher payments

Imperfect Credit Programs

Pros:

  • 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

Cons:

  • Higher rates
  • Terms may not be as favorable
  • Harder to get long term fixed loans
  • Loans may have prepayment penalties

Home EquityLine of Credit

Pros:

  • You only borrow what you need
  • Pay interest only on what you borrow
  • Flexible access to funds
  • Interest may be tax deductible

Cons:

  • Rates can change, max rates are normally high
  • Payments can change
  • Harder to refinance your first mortgage

Home Equity Fixed Loan

Pros:

  • Fixed payments
  • Interest may be tax deductible

Cons:

  • Higher interest rates than on 1st mortgages
  • Harder to refinance 1st mortgage